[Ryan Blundell]

As the Waterloo, Ontario-based RIM seeks to satisfy Beijing that its handsets pose no security threat to China's communications networks, other homegrown competitors--including a cleverly nicknamed "RedBerry"--are making headway.

RIM, whose share price has more than tripled over the last year, has partnered with China Mobile, the world's largest cellular operator, but will have to play catch-up with the popular local "RedBerry" service run by China's No. 2 mobile operator, China Unicom.

"Chinese businessmen are not that international yet, so they are not as familiar yet with the BlackBerry and prefer local gadgets," said Rock Yang, principal handset analyst at the Beijing Economic-Technological Development Area, or BDA.

"Price will be the deciding factor in determining how the BlackBerry expands in China," he added.

The BlackBerry is available on about 300 networks in 120 countries. Having launched in Japan, South Korea, India and Taiwan, the BlackBerry's last major Asian frontier is China.

Although China Mobile has launched SIM cards for the BlackBerry, the actual handset is not yet available, RIM has said.

Media reports said in July that RIM had received approval from Chinese regulators to begin shipping its devices, which helped popularize wireless e-mailing, to the mainland through the parent of Hong Kong-listed China Mobile.

Besides the RedBerry--whose official name is "Cai E"--Chinese subscribers can also take their pick from several low-cost mobile e-mail services from a range of providers, including Leadtone Wireless and Ufida Software.

As RIM tries to push the BlackBerry beyond its traditional high-end corporate niche, it will have to decide whether to sacrifice high per-user revenues to woo Chinese retail consumers.

China also boasts hundreds of gray-market firms that make clones of popular branded phones for a fraction of the originals' price, which will be a key challenge for RIM, as it makes most of its revenue through handset sales.

While a BlackBerry handset is as yet not officially available for sale in China, a knockoff can already be bought online for as little as 270 yuan ($36).

There is also a gaping difference in cost of mobile e-mail services in China.

China Mobile charges corporate customers a service fee of 598 yuan ($80) a month for 400 megabytes of mailbox space. China Unicom's "RedBerry" service, by comparison, charges a mere 30 yuan ($4) a month for 200 megabytes of mailbox storage.

The sheer scale of China's market--the world's largest mobile area, with some 516 million users--may mean that RIM may not need to focus immediately on its traditional high-end corporate market, analysts said.

"The market for mobile e-mail is potentially huge, so local rivals may prove less of an obstacle to RIM than they might, on the face of it, appear to be," said Tony Cripps, analyst at research provider Ovum.

Chinese authorities' concern about communications network security may explain why RIM took so long to officially introduce the BlackBerry in China, said Melissa Chau, an Asia-Pacific associate market analyst at IDC.

Sensitivity to security issues may also prove a stumbling block in the future, analysts said.

"Government regulations certainly have a role to play when it comes to the technologies BlackBerry uses, especially when it comes to security," IDC's Chau said.

In particular, Chinese authorities are scrutinizing BlackBerry technology to ensure that the way data is routed through overseas servers does not pose a security threat, Chau said.

Media reports have said RIM's high-level encryption technology would make it difficult for Chinese authorities to gain access to and monitor e-mail messages, another potential cause of the delay in introducing the BlackBerry to China.

In the long term, security concerns and a preference for promoting home-grown technologies may lead the Chinese authorities to favor local players.

"The Chinese government's strong support of homegrown technology could favor local solutions more than (those developed) elsewhere, especially if that support translates to buyers of business technology," Ovum's Cripps said.