Nokia Corporation (ADR) (NOK): What the Heck Is It Doing Wrong in China?

Nokia CorporationNew numbers came out yesterday for Nokia Corporation (ADR) (NYSE:NOK)‘s sales in China — and things aren’t looking good. The company failed to benefit from a prime gift-giving holiday, and even the new Lumia 920T hasn’t turned the tide in the country.

Nokia Corporation (ADR) (NYSE:NOK)’s been busy in China over the past few months, but unfortunately, not all of it has paid off. At the end of 2012, the company jumped on board with China Mobile Ltd. (ADR) (NYSE:CHL) to sell it’s Lumia 920T, a move I thought would help the company. Having the China Mobile Ltd. (ADR) (NYSE:CHL) advantage could have boosted sales over the past few months, but apparently it didn’t work out that way.

Source: Nokia.

Nokia Corporation (ADR) (NYSE:NOK) announced its Q1 2013 numbers today, and the figures show device sales in China falling 26% from the previous quarter — and a jaw-dropping 63% decline year over year.

Despite Nokia’s 20-year history in the country, the company holds about 1% of the Chinese smartphone market right now. The company lost its 50% smartphone market share after Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) swept in with its operating systems. With China recently taking the No. 1 spot as the biggest smartphone market, Nokia investors should be very concerned with the company’s latest China sales.

So what the heck is going on over there?

Apple Inc. (NASDAQ:AAPL) and Samsung are two fierce mobile competitors, and Nokia Corporation (ADR) (NYSE:NOK) simply hasn’t been able to beat them in China’s high-end mobile market. That may be why Nokia is developing a cheaper line of phones for developing markets.

Nokia CEO Stephen Elop recently said at the World Mobile Congress: “There’s a very large number of inexpensive and largely undifferentiated devices. We believe we have to offer differentiation at each price point.” But Nokia Corporation (ADR) (NYSE:NOK) already sells cheap phones in China, so believing that a new line of low-end phones will rebound Nokia’s position in China may be wishful thinking.