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To: Clarksterh who wrote (19697)	12/14/1998 10:45:00 AM
From: DaveMG	Read Replies (1) \| Respond to of 152472

China curbs foreign role in telecoms By James Kynge in Beijing China has drawn up a detailed plan to reduce the market share of foreign telecommunications equipment makers over the next five years and boost that of its own local champions in a fast growing market already worth about $7.5bn in annual sales. A state council (cabinet) document, which has not been made public, criticises foreign joint ventures and wholly owned subsidiaries for being too slow to transfer technology to Chinese equipment makers. It adds local equipment makers have developed quickly but are still significantly behind the foreigners and so need help. China has become a crucial market for companies such as Ericsson, Nokia, Motorola, Nortel, Siemens and others. For example, Nokia sold about $1.2bn in equipment in China in 1997 and sales have continued to boom this year as the number of mobile subscribers has risen by around 1m a month. The document recommends greater control over imports of GSM mobile telephony technology, especially where this technology can be sourced from local manufacturers. Two Chinese companies, Huawei Technologies and Datang Telecom Technology, have recently developed and are operating GSM systems networks. These companies are regarded by the government as shining examples of how China can strive to succeed against technologically more advanced foreign competitors. The document also says that cities and provinces should not approve foreign joint ventures or wholly owned subsidiaries to set up their GSM systems. Foreign GSM systems are already in extensive use in China, and orders continue to come from cities and provinces wishing to expand existing services. The new recommendation appeared to apply to areas which are not already covered, analysts said. The document also recommended greater supervision of whether foreign manufacturers in China are transfering technology to Chinese companies fast enough, and whether they are meeting their agreed targets for exports. In addition, it recommends a 5 per cent tax on mobile telephone installation fees, the proceeds of which would go to support research and development at Chinese companies. A second document, this one written by the ministry of information industries, sets out ways to implement the state council's recommendations. It predicts that by 2001, Chinese companies will control 40 per cent of the mobile equipment market, up from probably less than 10 per cent now. ft.com