"3Com Plans Increased Investment In Joint Ventures With China"
September 9, 1998
By I-CHUN CHEN
Dow Jones Newswires
BEIJING -- Seeking to take advantage of China's drive to develop its
information-technology industry, 3Com Corp. plans to invest more than
$100 million in joint ventures during the next two years, company officials
said Wednesday.
"We think China is poised for dramatic growth in the industry," said Paul
Sherer, 3Com's vice president of technology development. "China will
become a very significant player in our business over time in terms of
percentage of revenues."
But despite the company's confidence that
China's contribution to company sales will rise
over the next few years, Mr. Sherer said the
pace of growth will depend on how quickly
Chinese companies and government agencies start using networking
technology. 3Com makes products that are used on Internet- and
intranet-based computer networks.
Aside from an already announced joint venture worth $33 million, the
Santa Clara, Calif., company also plans to support educational seminars
and computer-network training over the next two years, Mr. Sherer said.
In July, 3Com announced a joint venture with Beijing Kuanguang
Telecommunications, Beijing Guochuang Information Technology and
Beijing Yuguangtong Science & Technology Development Center. The
new venture will make network-technology products such as modems and
switching equipment.
3Com will provide details at the end of the year on when the joint venture
will start up, said Minnie Lee, public-relations manager for 3Com's
Asia-Pacific Rim.
3Com has also set up a venture with the China Academy of Sciences to
research possible uses for network technology. A main area of research
will be "converged networking," the integration of voice, data and video
transmissions over the same system, Mr. Sherer said.
Mr. Sherer predicted that the portion of data transmissions over networks
will soon overtake voice transmissions. Video transmission, used in
teleconferencing, is an even newer technology that has already been
developed but is waiting to gain greater acceptance, he added.
Meanwhile, 3Com's share of China sales for switches, network-interface
cards, routers, hubs and remote-access servers reached a combined 31%
last year, amounting to about $150 million in sales, officials said, adding
that the company's market share in Asia was about 27%.
"Asian sales growth is lower than we were predicting a year ago," Mr.
Sherer said. "But we expect China sales to be fairly steady over the next
year."
According to International Data Corp., network-system sales in China for
the overall industry surged 68% in the first quarter this year from the
year-ago quarter, compared with 5% growth for Asia, excluding Japan.
Mr. Sherer attributed 3Com's flat sales in its fourth quarter ended May 31
to the "cyclical nature" of its business, adding that he foresees sales picking
up at the end of the calendar year. Mr. Sherer also said that the company's
new products in converged-network systems and higher-speed access
technology will help boost sales in the next fiscal year.
Mang
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