Three quarters of all mobile phones sold in China are made by foreign companies, but local manufacturers are still growing, new research has revealed.

Sales of GSM handsets, which account for more than 90 per cent of China's mobile phones, rose 11.3 per cent to reach 34.8 million in the first quarter, according to Beijing-based Analysys International. 

Nokia leads the foreign vendors, which together hold more than 70 per cent of the market. Nokia itself accounts for 30 per cent. 

Among local manufacturers, Lenovo has shown particularly strong growth recently with sales jumping to 6.5 per cent from 4.7 per cent in the fourth quarter. 

"Driven by the high output in the second half of 2006, mobile phones in the whole year saw a 45.7 per cent rise in output, the fastest since 2002," wrote analysts from CCID Consulting in a report published this week. 

"After the high growth at the end of 2006, mobile phone makers in China entered a traditional period of reduced growth in early 2007."

Although local production of mobile phones slowed down slightly in the first quarter, developments in high-end products such as smartphones are expected to drive output upwards by the end of 2007, CCID reported.

The long delayed rollout of 3G in China will also drive market growth, CCID and other research firms agree. The government appears to allowing carriers to begin widespread 3G services in time for the Beijing Olympics in 2008.