In preparation for China's National Day holidays in October, distributors and retailers in the country have significantly increased smartphone orders but demand for PC-related products will be comparatively weak due higher-than-normal inventory levels, according to industry sources.

Currently, the most popular smartphones in China ranges between 1,000-1,500 yuan (US$146-220), and growth for the price segment in the third quarter of 2010 is expected to improve substantially, sources from China-based channel operators said. With Chinese consumers developing preferences for larger screens and higher resolution camera features, sales of 500 yuan entry-level smartphones have slowed this year.

High inventory levels in China's sales channel have stunted PC demand during the traditional high season leading up to the National Day holidays. Though PC sales have been disappointing thus far and channel operators are conscious with inventory management, they expect mild sales growth during the upcoming back-to-school season and holidays.

The average PC inventory level in China's sales channel reached 50 days at the end of the second quarter versus about 30 days during the same period in 2009.