Nokia said today it will stop selling mobile phones in Japan except for its luxury Vertu brand after struggling to expand its presence.
Finnish Nokia has previously said it will cut costs 'decisively', expecting global mobile phone sales to shrink next year amid an economic downturn.
Japan is the world's fourth largest mobile phone market after the United States, China and India. But it makes up only a tiny part of sales at Nokia, whose products have failed to lure customers away from more sophisticated Japanese ones.
Mobile phone companies also see limited scope for growth in Japan, where 109 million subscribers, or some 85 per cent of the population, already own a mobile phone. In addition, a new sales model based on higher handset prices is expected to slash annual mobile phone sales in Japan by some 20 per cent.
"In the current global economic climate, we have concluded that the continuation of our investment in Japan-specific localised products is no longer sustainable," Nokia executive vice president Timo Ihamuotila said in a statement.
He added that Nokia's Japanese business would concentrate on research, development and sourcing for the global market as well as specific projects such as the Vertu brand.
The quirks of Japan's mobile phone market have prevented foreign companies, including Nokia's rivals such as Samsung Electronics and LG, from successfully targeting Japanese consumers.
Most of the mobile phones used in Japan are part of third-generation networks and boast features such as TV broadcasting and electronic payment functions.
This makes it tough for foreign manufacturers to compete with domestic handsets.
Foreign companies, excluding Sony Ericsson, only occupy around 5 per cent of Japan's cellphone market, according to IDC Japan, a research firm. Japanese manufacturers, in turn, have only a small presence outside their home market.
Reuters