China>
On Hold
Telecommunications, in general, has been one of the hardest industries for foreign investors to break into in
China. On the one hand, China's reluctance to bow to pressure to open up the world's second biggest
market -- it has more than 100 million lines -- is one reason why WTO talks are snagged. On the other, the
government seems divided on the pace of opening. In April, Premier Zhu Rongji offered the U.S. up to 49
percent foreign share in all telecommunications services, and 51 percent for value-added and paging units
within four years after entering the WTO. That's up from zero percent ownership now.
That offer may have been more than what Zhu's cabinet colleagues want, however, with negotiators from the
European Union given a less generous offer during talks in May, E.U. officials said.
Foreign makers of phone equipment are also left hanging as the WTO negotiations drag on. For LM
Ericsson AB, the Swedish supplier of mobile and fixed-line phone equipment, it means delays in deciding
whether to make one of its newest handset models, the R250 PRO, in China.
''In a non-WTO world we might actually have to set up a small assembly operation for even that phone if
we want to sell it in China,'' said Michael Ricks, president of Ericsson (China) Co. Ltd.
If China enters the WTO, it's likely Ericsson will be able to import the handsets at a lower tariff rate than
now, making it unnecessary to build new production lines.
Years of delay in China's approval of U.S.-standard CDMA mobile telephone technology may also be over
if China joins the WTO. That would boost orders for suppliers such as Motorola Inc. and Samsung
Electronics Co.
Lucent Technologies, which has already hired more than 200 staff to start selling the CDMA service and
equipment in China, is mulling letting some go if there's no approval soon.
Chinese View
For many Chinese firms, the drawn-out WTO talks are a good thing, giving them more time to prepare for
fiercer competition. Take Wuhan Steel Processing Company Ltd., a maker of cold- rolled silicon steel
products used in electrical machinery. China slashed import quotas for such products by 40 percent this year
- - action that would have been barred if China were in the WTO -- filling Wuhan's order books beyond
capacity. |
