Magazine article Business Asia

US on Hold in China's Mobile War

Magazine article Business Asia

US on Hold in China's Mobile War

Article excerpt

A monopoly on mobile phone services in China by European companies could be under threat as the United States makes a move for the mainland.

After storming to a commanding lead in China, European mobile phone companies such as Ericsson and Nokia could face a tough challenge if China follows through with plans to open the door wide to United States cellular technology.

Nokia and Ericsson, however, do not appear unduly concerned, and analysts said it would take time for CDMA technology to prove itself in the market.

In a sudden shift, China has signalled it will allow Chinese telecommunications firms to build CDMA (Code Division Multiple Access) networks, industry players said.

The US-developed technology is now limited to trials in four cities.

China's market for mobile network equipment and handsets, worth billions of dollars annually, has been dominated by GSM (Global System for Mobile Communications) technology from Finland's Nokia and Sweden's Ericsson.

Beijing now appears ready to back its small telecommunications firm, China Unicom, to build CDMA networks to compete with the state-owned virtual monopoly, China Telecom.

"It's not good news, of course, if it happens," said Ericsson senior vice-president Mr Jan Malm in Beijing.

Mr Andrew Page, head of Nokia's corporate planning in China, declined to comment on the impact of such a shift.

"It's still speculation. We can't really comment about that until there's some form of government announcement," he said.

Neither of the Nordic companies makes CDMA network equipment, although Nokia does make CDMA handsets for the US market.

The stakes in the Chinese market are huge. Growing commercialism and rising standards of living mean more Chinese are in the market for high-tech commodities.

In 1998, China overtook the United States as Ericsson's largest market, with more than US$2. …

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