BEIJING - Swedish
telecommunications giant Ericsson will invest US$1
billion in China over the next five years to
further engage the world's largest mobile
communications market.
The money will be
used to improve Ericsson's manufacturing, research
and development (R&D), and service in China,
according to Ericsson President and CEO Carl Henic
Svanberg. "We not only see China as an interesting
market, but [as] a main hub for supply and a
growing market when it comes to R&D," he told
the Ericsson Strategy & Technology Summit
recently.
The investment will allow
Ericsson to win a third of the market for advanced
equipment that allows faster downloads of movies,
music and games on
handsets, according to Svanberg. "Users are
demanding more mobile content, operators are
looking for new revenue sources and media
companies need new distribution channels. This is
in line with our vision of an all-communicating
world and we are confident that the mobile content
industry has wonderful potential," said Svanberg.
The 53-year-old CEO said he expects China
to start issuing licenses for such
third-generation (3G) networks in the next six
months, after correcting technical glitches. "What
we can see is that the world would expect the
networks to be up and running ahead of the
Olympics and I think we are getting very close,
and it's probably good timing now, if it comes out
in half a year or so," he said. He added that
China is likely to spend $10 billion to $12
billion on 3G networks within three years of the
issue of licenses.
Svanberg also announced
that in a strategic move in R&D cooperation,
Ericsson has signed its first agreement with the
Shanghai Research Centre for Wireless
Communications (SHRCWC). Under the agreement,
Ericsson will collaborate with SHRCWC in
undertaking research projects on future
telecommunications technology, such as Super 3G
and 4G.
Ericsson already has 10 R&D
centers in the country employing 1,100 engineers,
said Mats Olsson, Ericsson's president for
business in China. The company has built a center
in Guangzhou for after-sales servicing of networks
and has a facility in Qingdao focusing on
fixed-line broadband networks. "We're in close
co-operation with China Telecom and China Netcom
in preparing for 3G," Olsson said. "We're also in
development of service networks for China
Telecom."
The company signed a cooperation
deal with major Chinese telecommunications
equipment provider ZTE in May on developing a 3G
technology called time division synchronous code
division multiple access (TD-SCDMA), a system
supported by China. It is now widely agreed that
TD-SCDMA is almost certain to be deployed in
China, the world's largest mobile communications
market, with over 300 million subscribers. The
home-grown TD-SCDMA standard has been tested in
several rounds of trials organized by the Ministry
of Information Industry, and is believed to meet
the requirements necessary for a commercial
launch.
Ericsson, which on July 21
reported an 18% profit increase to 5.8 billion
kronor ($749 million) in the second quarter of
this year, said its Asia Pacific sales rose 8% in
the period mainly on the back of growth in China
and India. The company expects the global
mobile-phone market to reach 2 billion users this
year, adding almost 1 million a day, said
Svanberg.
Ericsson is a Swedish
telecommunications equipment manufacturer, founded
in 1876 as a telegraph equipment repair shop by
Lars Magnus Ericsson. In the early 20th century,
Ericsson dominated the world market for manual
telephone exchanges; the world's largest-ever
manual exchange, serving 60,000 lines, was
installed by Ericsson in Moscow in 1916. In the
1990s, Ericsson held a 35-40% market share of
installed cellular telephone systems.
Headquartered in Stockholm, Ericsson is considered
to be part of the so-called Wireless Valley.
Like most of the telecommunications
equipment industry, Ericsson suffered heavy losses
after the telecommunications crash in the 2000-01
period and had to lay off tens of thousands of
staff worldwide in an attempt to staunch the
losses. The company became profitable again in
2004. Recently, the loss-making handsets division
was divested into a joint venture with Sony,
called Sony Ericsson. Ericsson now concentrates on
its core systems: supplying infrastructure for all
major wireless technologies and modernizing
existing copper lines for broadband services.
