Google's despite Google Android mobile operating system has found an unlikely source of support in China - the biggest mobile phone market - despite Google's threat to pull out of the country.

Hundreds of small, grey markethandset makers are seeking to become legitimate manufacturers of more advanced devices.

Political uncertainty about Google's status in China led last month to the delay of two Android phone launches , which analysts say could hurt confidence in its development in the country.

But in the southern city of Shenzhen, the hub of the industry, a different business dynamic is driving small mobile phone manufacturers to adopt Android.

While Microsoft and Nokia charge phone makers for the use of their operating systems, Google's Android is free.

It is proving so popular that Mediatek, the Taiwan chip designer that supplies half of all mobile phone chips and which has been working on a Windows Mobile-based smartphone chip, said this week that it was developing a chip that supported Android.

Hsieh Ching-jiang, Mediatek president, said: "Android is quite an attractive solution, and a lot of our Chinese clients have requested that we have this capability."

Many small operators began as makers of grey market "bandit" devices or cheap imitations of branded models, which have grown into a big market.

Grey market manufacturers made 145m phones, or about 13 per cent of the legitimate handset market, last year, with an increasing proportion exported to other emerging markets, according to iSuppli, the research group.

Mediatek expects its handset shipments to increase 20 per cent to 450m this year.

The factor that is driving the switch from "non-badged" operating systems to Android, however, is that the handset makers are trying to establish legitimate brands producing more sophisticated, internet-capable phones.

Using a mainstream operating system is a vital step towards this goal, phone manufacturers say, but cost is a big consideration.

Echo Liu, sales manager at SOP Electronic, a Shenzhen handset maker, said: "Margins in the export business are squeezed to an unsustainable extent."

The growing importance of these manufacturers prompted Microsoft to sign a deal last month with Mediatek - the second biggest chip supplier after Qualcomm - that will make it easier for China phone makers to use Windows Mobile from a Mediatek chip.

Microsoft and Mediatek declined to give details of the deal, and Microsoft said it had no comment on competitive pressures from Android in China.

One Taipei-based analyst said: "Without Mediatek in the picture, there was no way at all that the small phone makers would sign on with Microsoft, so this at least gives them a chance . . . but the long-term trend is definitely a move towards Android."

Source:ft.com