Here's a raised glass: China Unicom Delays Plans to Award Contracts to CDMA-Gear Suppliers
By Matt Pottinger
Staff Reporter of The Wall Street Journal
HONG KONG -- China Unicom Group has postponed signing contracts to purchase roughly US$1.7 billion of CDMA wireless equipment from Motorola Inc., Lucent Technologies Inc. and other vendors, but didn't offer reasons for the holdup or say how long it would last.
Executives with Chinese and foreign equipment suppliers said state phone operator China Unicom called their offices Friday to inform them that contract signings scheduled to take place over the weekend would be delayed until further notice. "No particular reason" was given for the postponement, said Sonia Kim, spokeswoman for Samsung Electronics Co. in Seoul.
Samsung is among 10 foreign and domestic equipment makers who received word from Unicom last week that they had won bids to help build a nationwide mobile-phone network in China running on the CDMA standard. The combined deals would mark one of the largest single outlays for equipment by a Chinese state-owned company, and would boost the fortunes of San Diego-based Qualcomm Inc., which stands to earn royalties on sales of CDMA, or code division multiple access, gear.
Of six Chinese and foreign telecommunications companies reached by the Asian Wall Street Journal on Monday, an executive at one said he had received private assurance from a senior Unicom official that the delay was "a simple procedural issue," and that China's State Council, or cabinet, wanted to vet the final monetary figure for the deal.
Executives at the other companies, however, said they received no such assurances, and several expressed fears that the deals may have become snarled in testy relations between Washington and Beijing. With China launching into a weeklong national holiday for Labor Day Tuesday, executives said they would be left on edge until Unicom and government officials returned from vacations and clarified the delay.
Unicom executives in Beijing and Hong Kong couldn't be reached for comment Monday.
To be sure, it isn't unusual in China for large deals to be delayed while state planners digest the political and economic ramifications. In some cases, concrete explanations are never offered for months-long delays.
If politics is to blame for the latest delay, it wouldn't be the first time the CDMA issue has been embroiled in the volatile Sino-U.S. relationship. In May 1999, after U.S. warplanes dropped bombs on the Chinese embassy in Belgrade during the North Atlantic Treaty Organization's air campaign over Yugoslavia, CDMA contract negotiations between China Unicom and foreign vendors were shelved for six months, although no explicit reason was given. The technology was also featured in the context of bilateral negotiations toward China's accession to the World Trade Organization.
Lee Boam, a senior U.S. diplomat in Beijing, said it was much too early to make a correlation between recent relations and the Unicom deal. However, Mr. Boam, minister-counselor for commercial affairs at the U.S. Embassy, said he has received anxious calls from a few of the bidding companies.
"There's no first-hand information we can generate from anybody saying these contracts aren't going to be signed," he said. "The fact things don't run like clockwork at the signing stage is not something that is getting us panicky at the current time."
Of the companies China Unicom last week said it would award contracts to, only Lucent and Motorola are based in the U.S. Besides South Korea's Samsung, others include Nortel Networks Corp. of Canada; Telefon AB L.M. Ericsson of Sweden; and Alcatel SA of France, which owns part of the joint venture Shanghai Bell. Chinese companies include Huawei Technologies Co., Shenzhen Zhongxing Telecom Co., Guangzhou Jinpeng Group Co. and Datang Telecom Technology Co., according to Unicom. |
