China Ousts CDMA, For Now
wirelessweek.com
From the March 8, 1999 issue of Wireless Week
By Owen Hughes
HONG KONG--Political and economic reasons likely will be the main factors behind China's
suspension of code division multiple access technology, according to a Hong Kong-based analyst.
Joe Locke, a research analyst with ABN Amro Asia said Beijing's desire to cut the commercial
activities of the People's Liberation Army and the favorable rates offered by global system mobile
communications technology were the main factors behind the move.
The PLA's telecommunications joint venture, Great Wall, was behind the construction of four trial
CDMA networks using its nationwide 800 MHz spectrum in a joint venture with its partner, the
Ministry of Information Industry. However, last year the military was ordered by Premier Zhu
Rongji to pull out of its myriad business activities, and the networks were never permitted to roll
out commercially.
"Practically speaking, there are two reasons for not allowing a CDMA network. One is the PLA
issue, and the second is that you have the GSM providers who are beating each other over the
head to get the business with China," Locke said.
He said the Scandanavian giants, Nokia Corp. and Ericsson Inc., as well as Motorola Inc., are
discounting their products in a bid to attract Chinese business. China accounts for nearly 10
percent of Ericsson's cellular handset sales, and the company has a manufacturing plant in the
country.
Nokia this year will set up a distribution system in China incorporating 500 professional centers
and 100 service centers, taking its brand-building from the regional down to the provincial level.
Andrew Page, corporate planning manager of Nokia China, has said the company's goal is to
become "China's preferred telecoms partner."
Locke said Nokia, Ericsson and Motorola "produce as much as they can locally," and the head of
the MII, Wu Jichuan, made it clear that his aim is to support Chinese companies, or at least those
with joint ventures on the mainland.
Although the moratorium on CDMA network construction came as a severe blow to U.S.
companies such Qualcomm Inc. and South Korea's Samsung, Locke said he did not think the
door is being shut on them permanently, suggesting that they may be able to participate in the
development of third-generation technologies.
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