Sharp is aiming for upscale users in Shanghai and Beijing to avoid direct competition from lower-priced phones by global leaders such as Nokia and Samsung Electronics Co Ltd, which have greater economies of scale.

The move follows pull-outs by fellow Japanese handset makers Matsushita Electric Industrial Co, NEC Corp and Kyocera Corp, which failed to earn a profit in price-competitive China despite a lineup of some of the world’s most cutting-edge phones.

Sharp will begin selling its first China handset – an adapted version of the Japanese 920SH marketed by carrier Softbank Corp – later this month for a price officials said would be “at least 3,000 yuan” ($434).

Sharp, the largest handset maker for the Japan market, will supply two or three additional Japanese models in China by year-end, said Yoshisuke Hasegawa, group general manager of Sharp’s communication systems group.

“We hope the business will be able to stand on its own two feet” in 2009/10, he told reporters after a news conference. “The next step could be India or Indonesia – growth lies overseas.” (Reuters)