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Nokia set to axe China R&D jobs

Belt-tightening hits Beijing

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Nokia’s woes in the world’s biggest mobile market are set to continue after reports emerged that the ailing Finnish firm has been forced to purge some of its Chinese R&D team as part of the 10,000 lay-offs announced last month.

The mobile phone giant has been having a tough time of it recently.

It’s struggling to make an impact with its Windows Phone-based Lumia handsets against fierce competition from Apple and Samsung. The competition is so fierce Nokia recently posted some distressing disappointing Q2 financials – with sales down 20 per cent year-on-year and an operating loss for the quarter of €826m (£647m).

The firm decided to push ahead with plans to shed 10,000 jobs over the coming year as a result, although it has been tight lipped over where the axe will fall.

However, the company's Nokia Research Center in Beijing now appears to be one of the unlucky locations, with an unspecified number of R&D staff set to be trimmed from the plant, a Nokia source told Shanghai’s First Financial Daily.

The cuts at the Beijing centre, one of 13 Nokia research hubs located around the globe, will affect staff working on “forward-looking” technologies, but not ones working on S30 and S40 devices or Windows Phone handsets, the source added.

When contacted for a statement confirming the news, Nokia would only say the following:

In China, we are consolidating to bring more efficiency and focus to our business. Sadly, yes there will be impacts to some China employees with this change but we do not have specifics that we can provide at this stage.

The cuts come just days after Nokia announced it was closing two of its sales offices in the People’s Republic.

The South Region and West Region offices will be merged to form a new South Region sales office based in Guangzhou, and the North Region and East Region combined into a new North Region based in Beijing, looking after sales in northern and eastern parts of China.

Nokia was once the undisputed leader in China thanks to healthy sales of its feature phones, but saw its lead eroded by increasing competition and users shifting to smartphones.

Beijing-based analysts Analysys International had Nokia at number one in China’s mobile phone market in Q1 2011 with a share of 26 per cent but by the same time the following year it had slumped to second with 13.6 per cent, behind Samsung’s 20.7 per cent.

More worryingly, given long-term trends, its smartphone share is even worse, standing at 11 per cent in Q1 2012 behind Huawei (12 per cent) and Samsung (24.9 per cent).

While it’s not in a terrible position, the momentum definitely isn’t with the firm at the moment and it will need to do more than axe a few jobs to turn things around.

In Q1 it posted a year-on-year net sales loss in China of 70 per cent to €577 million(£452m). ®

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