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To: Stock Farmer who wrote (24713)	10/30/2002 1:39:04 AM
From: Maurice Winn	Respond to of 74559

John, your post seemed to be a couple of years out of date. The on again off again royalty tease was a Y2K effort. It's been long since resolved. CDMA is now in, cdma2000 1xRTT upgrades have been awarded, there are going on 5 million subscribers already. I don't think many QUALCOMM shareholders are expecting much in the way of royalties out of China. They'll be wholesaling handsets in China for about $50 [my guess] so $1 per handset will barely pay local QUALCOMM salaries. But they are buying QUALCOMM chips which are more profitable and they are gearing up for huge handset production capacity, which will lead to exports with lucrative 7% royalties. Mq

To: Stock Farmer who wrote (24713)	10/30/2002 1:58:27 AM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi John, <<China's Royalty Motel ... Roach Motel>> You must get the lingo correct, not motel, but "value trap" where values go in but they do not come out ;0) biz.scmp.com Wednesday, October 30, 2002 Mainland forays lead multinationals to 'value trap' CHRISTINE CHAN More than half the multinationals in China's consumer products and retail sectors are suffering persistent and significant losses, a leading consultancy estimates. The Boston Consulting Group report adds to growing anecdotal evidence that, despite its vast market and strong headline economic growth, multinationals have found it difficult to make money in China. Few of these companies are willing to admit publicly they are not making a profit after many years of investing in China. "The China value trap is real. Many companies are caught in it today and have seen significant shareholder value destroyed," said Hubert Hsu, vice-president and director of the United States-based Boston Consulting Group. "If your company hasn't fallen into the trap yet, chances are it will soon. And once caught, it may seem like quicksand." The estimates were arrived at after the firm kept track of more than 50 multinationals operating in China. All were leaders of their respective sectors or segments. Mr Hsu said the continued losses of multinationals were triggered by initial success in large cities which led them to expand into new locations and categories. However, they typically ran into a wall of new problems, including fragmented markets; low prices in areas beyond the large urban centres; different competitors in different regions, each employing different market approaches; immature distribution infrastructures and players; and extraordinary strains on organisational capabilities and infrastructure. "Most companies respond to these difficulties by allocating additional financial and human resources, only to become ensnared in the China value trap: the more they invest, the more they seem to lose as shareholder value drains away . . . with no turnaround in sight." Wide-ranging differences among the country's 600-plus cities alongside huge disparities in education, income and consumer behaviour and preference were to be blamed. The frugality of the Chinese exacerbated the problems, he said. In the beer industry, for example, international brewers had experienced annual losses that ran into tens of millions of US dollars, on top of hundreds of millions in failed investments that had been written off. "[Multinationals] often view Chinese consumers only in the context of their global brands. Although such brands provide many advantages, they also bring with them many constraints, especially when it comes to positioning, icons and messages," Mr Hsu said. Multinationals trying to access the China market tended to follow in the footsteps of earlier successful players. "However, when everyone is applying the same strategy in a certain sector, how can you beat others?" he said. He believed the multinationals should reduce the gap in production costs with their mainland rivals.