Telecom equipment makers cashing in on 3G issuance

Telecom equipment makers cashing in on 3G issuance
Apr 10, 2009 By Hu Hongjun ,

At the begging of 2009, a piece of news excited telecommunications equipment manufacturers: in early January, the Ministry of Industry and Information Technology of P.R.C. officially issued the third generation mobile communications (3G) licenses to the reorganized Chinese telecommunications operators.

Zhen Caiji, Board Chairman of Datang Telecom Group believed that in the background of the present international financial crisis, the issue of the 3G licenses will help stimulate the domestic demands and drive the comparatively rapid development of the economy.

3G feast attracts more eyeballs

The global financial crisis in 2008 seriously influenced the substantial economy. Demands for telecom equipments declined, which forced many telecommunications equipment manufacturers to lower their profit expectation and launch staff reduction plan.

With the issuance of the three 3G licenses, China 3G officially entered the phase of network construction. Insiders estimate that the total investment of China's 3G network construction will be no less than RMB800 billion yuan, which will help China deal with the current global financial crisis and drive the economic development through investment.

"The issue of 3G licenses will immediately attract social capital because people are always looking forward to the 3G market." said Chen Jinqiao, Vice General Engineer of Telecommunications Research Institute of the Ministry of Industry and Information Technology. 

Experts also think that during the revitalization of the Chinese economy, the telecommunications industry will be one of the leading industries. By providing more advanced 3G services and more interesting overall services for the society, the telecom industry will stimulate the consumption and boost the economic growth.

From scratch, the independent standard comes on stage dazzlingly

As for 3G, we must mention TD-SCDMA (TD for short), which is an international 3G standard China has independent intellectual proprietary rights. It may be called the largest highlight of China's 3G initiation.

With the issue of 3G licenses, the 3G strategy of China Mobile appears gradually. Till 2011, its TD base stations will add up to 145,000, and it is predicted to invest RMB58.8 billion yuan and construct around 60,000 new base stations in 2009.

Experts pointed out that China Mobile's all-out support will greatly promote the rapid development of China's domestic enterprises and realize the domestic demand stimulation and consumption expansion better, thus spur the economic growth.

Insiders say that the independently innovative TD can not only save a large amount of patent fees and strengthen the market competitiveness of the local Chinese companies, but also provide rare strategic development opportunities for local industry and local enterprises to surpass the global companies with its industrial development under the background of the current international financial crisis.

Till now, 58 enterprises including China Mobile have joined in the TD industrial alliance.

The large business opportunities on the TD market also attracts attention of multinational telecom equipment manufacturers and got the active response from telecom giants like Ericsson, Alcatel, and Lucent.

From weak to strong, the Chinese manufacturing industry grows up quickly

Some institutes predict that the global sales amount of Huawei in 2008 will breach US$20 billion and reach US$22 billion, and that of ZTE Corporation will breach US$10 billion. The growth rates of the two enterprises are both near 50 percent.

Insiders speak out that the Chinese telecom equipment manufacturers represented by ZTE, Huawei, and Datang are now shaking the previous pattern of the global telecommunications equipment manufacturing industry with its core technologies, cost advantage and capability to response to customer needs mastered with independent innovation. Data show that in the 3G network equipment bid invitation which had been conducted by the three major domestic telecom operators, the local enterprises took up over a half of the market share. Their share on the TD market is over 80 percent, and their share on the WCDMA market is over 60 percent, which changed the supporting role position of local mobile communications equipment manufacturers in the past.

For the future, Zhen Caiji stated that local telecom manufacturers including Datang Telecom Group will realize the change from "Made in China" to "Created by China" with the TS core technology and standard advantage. Huawei's Vice President Xu Zhijun is full of confidence, "The current global financial crisis means opportunities for Huawei."

China Economic Net

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