The Chinese cell phone market is growing like gangbusters and boasts an impressive 330 million subscribers. Mobile-phone sales are expected to rise 11 percent this year, and Western phone giants such as Motorola Inc. and Nokia Corp. are ringing up profits from the boom.

So why are China's own cell phone makers floundering?

The answer, which shows that not everything "made in China" is hot these days, reflects the increasingly sophisticated tastes of Chinese consumers.

China's phone makers have taken their lumps lately. Take TCL Communication Technology Holdings Ltd., which has been burdened by inventory problems and unpopular, low-end phone models. China's No. 2 phone maker posted a loss of $50 million for the quarter ended March 31 as revenue fell 13 percent from the year-earlier period. Last month, France's Alcatel bailed out of a once-touted joint venture with TCL. Analysts said Alcatel wanted to cut its losses from the phone-making alliance and focus on other businesses.

China's largest handset maker, Ningbo Bird Co., watched first-quarter profit drop 47 percent. Ningbo's Shanghai-traded shares have plunged 31 percent since the start of the year, while shares of TCL Communication, a unit of Chinese electronics giant TCL Corp., are down more than 38 percent in Hong Kong.

"Maybe one of the Chinese [phone] companies could succeed in two to three years, but right now it's hard to pick a winner," said Flavia Cheong, a fund manager with Aberdeen Asset Management PLC in Singapore. Aberdeen has steered clear of cell phone makers, Cheong said, though it has invested in China's largest cell phone carrier, China Mobile (Hong Kong) Ltd.

These days, China's increasingly wealthy consumers want fancy phones with such features as cameras and sharp color screens. Chinese producers have not been able to successfully integrate those features into their phones. The Chinese companies "were left behind in terms of new technology," said Johnny Chan, an analyst with J.P. Morgan in Hong Kong.

Chinese manufacturers also have been hard-pressed to procure high-end components, particularly at the heavily discounted rates commanded by global players such as Nokia, Motorola and Samsung Electronics Co., said Ted Dean, a managing director at consulting firm BDA China Ltd. The foreign companies also have improved their distribution networks in more-remote Chinese provinces, where cell phone use is growing fast.

That has led to a vicious cycle in which Chinese companies build up inventories of unpopular phones, then have to slash prices to move them out the door -- hurting profit and delaying innovations.

Meanwhile, "Chinese consumers are just getting more and more demanding," said Simon Leung, president of Motorola's Asian-Pacific operations.

Motorola's sleek, high-end "Razr" phone, which at one point cost nearly $1,000 in China, was a big hit there. In a recent BDA survey of Chinese consumers, more than 80 percent of respondents said they use a cell phone made by a foreign company.

The outlook for Chinese manufacturers is not promising. In this business, scale matters, and the larger Western phone outfits have the market clout. In the last quarter of 2004, Nokia sold 66.1 million handsets globally, BDA's Dean pointed out, giving it huge leverage with parts suppliers.

TCL, by contrast, made fewer than 10 million phones in all of last year.

So while "there's an assumption that the Chinese vendor is the lowest-cost [manufacturer] in this business, they're generally not," Dean said. Also, many phone makers have moved some operations to China to take advantage of lower labor costs. That has wiped out much of the cost advantage companies such as TCL and Ningbo Bird previously enjoyed.

More than 80 percent of respondents in a recent survey of Chinese consumers said they use a cell phone made by a foreign company.