INTERVIEW-Ericsson China chief hopeful for 2001
HONG KONG, Feb 2 (Reuters) - Swedish telecoms equipment giant Ericsson <LMEb.ST> hopes its China fortunes improve this year as mobile carrier China Unicom <0762.HK> builds a network using the CDMA standard and Ericsson redoubles efforts to boost handset sales, the firm's top China executive said on Friday.
Struggling Ericsson, which has lost market share for handsets in China's furiously growing market, roiled the telecoms equipment industry a week ago when it said it would outsource handset production to Singapore-based Flextronics International <FLEX.O>.
But Ericsson has said it would maintain handset production at its two Chinese joint ventures, and the firm's China president Jan Malm told Reuters in a telephone interview that the handset production revamp could result in increased production of Ericsson-branded handsets in China.
Flextronics will also make Ericsson handsets in China.
Malm also said equipment vendors expect mobile carrier China
Unicom to issue tenders by the end of March for gear to equip a CDMA-based network capable of serving six to 10 million users.
While Ericsson's global handset business has been a
money-loser, the company is the world's top maker of network
equipment, and China is Ericsson's number-two market after the United States.
China Unicom's plans for a CDMA network have been on-again,
off-again for nearly a year, but equipment suppliers, including CDMA-technology developer Qualcomm Inc <QCOM.O>, now expect the network will be built, providing a major beachhead for CDMA in the world's number-two wireless market.
The European GSM standard is dominant in China.
Malm said Ericsson hopes to begin shipping equipment for
Unicom's CDMA, or Code Division Multiple Access, network by the middle of this year.
He declined to say what Ericsson's revenue opportunity would
be from Unicom's CDMA network, although an official with fellow network equipment maker Lucent Technologies <LU.N> has said a 10-million user CDMA network would cost roughly US$1 billion to build.
Both foreign and domestic suppliers are expected to win
contracts to supply the Unicom network.
"In the end, the Chinese market is very competitive, so it
will not be a high margin market for anyone," Malm said.
Asked if Ericsson would earn positive margins on its sales to China Unicom, Malm laughed. "We hope so."
As for mainland handset sales, where Ericsson's market share
has shriveled to between 10 and 15 percent, the company hopes to see improved results by mid-year -- although not at the expense of decent returns.
"Of course we want to gain market share, but we also want to
turn around profitability," Malm said.
Ericsson chief executive Kurt Hellstrom said on Thursday that the number of mobile phone users in China would soar to 270 million by 2004, making it by far the world's largest wireless market. China now has more than 70 million mobile users.
REUTERS
Rtr 00:09 02-02-01 |
