INTERVIEW-Siemens earmarks $1.0 bln for China
By Bill Savadove
BEIJING, June 26 (Reuters) - Germany's Siemens <SIEGn.DE> will invest about $1.0 billion
in China on mobile communications as part of a planned $1.5 billion investment in Asia
over the next two to three years, a top company official said on Monday.
"Siemen's is putting much more focus on mobile business," said Lothar Pauly, a member of
the board for Siemen's Information and Communication Mobile Group.
"If you put focus on the mobile business, then you have to put focus on Asia, specifically on
China," he told Reuters in an interview.
Of the total Asian investment, $500 million would be for research and development, $500
million for marketing and $500 million for raising production, Pauly said.
The company's venture in Shanghai, Siemens Shanghai Mobile Communication Ltd, will
more than double production to 10 million mobile telephone handsets and 80,000 base
stations annually, Pauly told a news briefing.
The venture's sales volume is forecast at 8.0 billion yuan ($967 million) this financial year,
which runs from October to September, and will double to 16 billion yuan next financial year,
he said.
Siemens was also establishing research centres in Shanghai and Beijing and would to
jointly develop the TD-SCDMA (Time Division Synchronous Code Division Multiple
Access) mobile telephone standard with China, he said.
Field trials were scheduled for early 2001 and the system would go into operation at the
end of next year, Pauly said.
He said Beijing had assured Siemens that it would use TD-SCDMA and he expected the
jointly developed standard and UMTS -- the European third generation standard -- to
dominate over Qualcomm <QCOM.O> in China.
"What I am expecting more here in China is competition between TD-SCDMA and UMTS,
than competition with Qualcomm's IS-95 and the evolving CDMA 2000 standard. I think
going to three standards would be stupid for China."
China Unicom <CHU.N> <0762.HK> said earlier this month it was scrapping plans to use
current-generation CDMA technology, but would use Qualcomm's CDMA for later
generation systems.
The German industrial and technology group has so far invested $500 million in China and
established 50 operating companies and Siemens has eight joint ventures in China
involved in the communications area, company officials said.
Siemens was in negotiations to reduce its 70 percent stake in Xin De Telecom, originally
established to help finance China Unicom's network build-out in four cities through an
investment method now banned by Beijing, Pauly said.
Xin De, which is 30 percent owned by Beijing's investment arm China International Trust
and Investment Corp (CITIC), had since shifted to leasing equipment to Chinese operators.
Pauly said Siemens was in talks with another foreign company to take part of its current
stake and negotiations could be completed within three months.
"We would like to continue, but not necessarily with 70 percent," he said. "We can very well
imagine to reduce our share to a minority share."
($1=8.276 Yuan)
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