Chinese Telecom Buys $1.3 Billion in U.S. Gear

By eweek  |  Posted 2001-07-09

The $1.3 billion in equipment deals announced last week between China Unicom and four U.S.-based providers of wireless technology are watershed events in opening the worlds largest market to foreign exports, the vice president of Chinas second-largest telecom provider believes.

"This fully demonstrates that Chinese businesses will play a very active part in improving China-U.S. relations," said Lu Jianguo, vice president at China Unicom, which provides long-distance, voice, data, wireless and satellite services to tens of millions of subscribers.

Since the Chinese governments first halting steps to let other Chinese service providers compete with former state monopoly China Telecom seven years ago, "the competitive environment is well- improved," he said.

Two years of protracted negotiations culminated in the signing of the first-ever deals with China in which U.S. players will provide wireless Code Division Multiple Access (CDMA) handsets and network equipment to China Unicom.

Last week, representatives from Lucent Technologies, Motorola, and the U.S.-based CDMA divisions of Ericsson and Nortel Networks praised the breakthrough deals at a ceremony with Chinese officials in Washington, D.C.

"These deals speak volumes about the willingness of China to engage with U.S. companies," said Greg Farmer, senior vice president for International Affairs at Nortel. "Its a smart, logical step for the future of the U.S. economy and China."

"U.S. companies have been pushing China to be neutral with regard to technology," said Karen Sutter, director of business advisory services at the U.S.-China Business Council. "Its important they chose a U.S. patented technology like CDMA for showing theyre not locked into one standard."

The deals, not coincidentally, finally came together just three months before a meeting in which the World Trade Organization will consider China for full membership. "WTO will bring us new opportunities and challenges as well," Lu said. "China Unicom welcomes foreign investment."

If China joins the WTO, its bilateral agreements allowing foreign ownership of companies operating within its borders would be much better enforced. That could mean carriers such as AT&T, Global Crossing and Sprint could begin competing with Chinese companies in the worlds most populous nation. And it would mean equipment vendors already making inroads in China wouldnt be forced into joint ventures and equity stakes arrangements with Chinese companies to close deals.

"China is well-positioned for high-speed data wireless services that will be in demand in the future," said Michael Iandolo, vice president of cellular and PCS product management and marketing at Lucent. The company expects to launch by Oct. 1 its deal to get wireless services into the hands of 4.2 million new Chinese subscribers. China soon will be the largest wireless market in the world, and expects 500 million subscribers by 2005.

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