InterDigital Inc (IDCC)

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NEC hopes to gain upper hand in China
2004-11-5
(NEC has a jv w/ Matsushita & Huawei....look forward to the MII field trial results next week 11/08-11/10 and a JPO ruling in 05')

Japan‘s communications giant, NEC, hopes its runaway success in the global 3G (third-generation) mobile communications market can be emulated in China, which is the world‘s most dynamic telecoms market.

NEC is reshuffling its business and preparing to beef up localization in China to ensure it will have a better position in the upcoming 3G market, said Ken Lu, executive vice-president of NEC Telecommunications (China) Co Ltd.

"We have scored big success in the global 3G market. There is no reason for us not to succeed in China."

NEC has integrated its telecoms units in Guilin, Xi‘an, Tianjin and Wuhan into a single entity.

"The reshuffle will help turn NEC into a market-driven company," Lu said.

NEC has also localized its management team in China.

Now, Lu Lei and Ken Lu, two Chinese natives, head NEC‘s team in China.

That is rare among Japanese multinationals in China, as Japanese tend to head their firms‘ management teams.

Before joining NEC, Lu Lei and Ken Lu were vice-president of Motorola China and vice-president of Motorola, Asia-Pacific, respectively.

"Our intensifying localization efforts will help NEC respond to customer needs in China more rapidly," Ken Lu said.

NEC has been the largest provider of both 3G WCDMA base stations and mobile phones in the world.

By August, NEC, in partnership with Germany-based Siemens, has signed WCDMA equipment supply orders with 31 3G operators in 16 countries.

NEC and Siemens provided 23,800 WCDMA base stations by August, with a 35.1-per-cent share, the largest, of the world‘s WCDMA base station market.

Its nearest rival in the WCDMA base station market, Ericsson, held a 22.8-per-cent share.

NEC controls more than 52 per cent of the global 3G WCDMA mobile phone market.

However, the firm‘s share of the 2G/2.5G mobile equipment and cellphones in China is much lower.

NEC held a mere 3-per-cent share of China‘s mobile phone market last year. Meanwhile, handset sales in China in 2003 grew about 9 per cent, to reach 60 million units.

Despite its underperformance in the current 2G market, NEC believes its rich experience, accumulated in the global 3G market, will help it gain the upper hand in China‘s 3G market, said Ken Lu.

"The 3G market is quite different from the 2G market," he said.

In the 2G market, particularly in China, mobile phones are sold directly to consumers. However, in the 3G era, operators usually ask manufacturers to tailor the phones and sell them, with the operators‘ brands, to customers.

One of NEC‘s key strategies in China will be partnering with operators and governments to jointly tap the local market, Ken Lu said.

NEC is already gaining recognition among Chinese operators and governments.

The firm is already one of the few cellphone makers that provide tailored mobile phones to China Mobile, the country‘s largest cellular operator.

Also, NEC has provided two 3G handset models for field tests, which were led by the Ministry of Information Industry (MII).

Other manufacturers provided only one model.

The field tests were completed in September. MII is expected to announce the results during a 3G forum, which is scheduled for November 8-10.

The Chinese Government has yet to award operators with the licences to build 3G networks. Industry observers widely expect the licensing will occur next year.

3G mobile phones are usually high-end products, but NEC will consider developing low-priced 3G phones in China, where customers are usually more price-sensitive, said Brian Holmes, vice-president in charge of NEC Telecommunications China‘s mobile phone development.

NEC has already provided a 3G phone to Hong Kong-based operator H3G. The model is being sold for less than HK$1,000.

The development of 3G WCDMA experienced some hiccups in the early days, due largely to the short battery life of mobile phones.

Lou Qinjian, MII‘s deputy chief, said last month, during the Shenzhen High-tech Fair, the lack of 3G mobile phones was one of the biggest barriers that curbed 3G development in China.

That situation is changing, Holmes said.

A new NEC handset model now boasts a 400-hour battery life, which is even better than a 2.5G phone, Holmes added.

To better serve the Chinese market, NEC has moved its supply chain, including its research and development (R&D) centre, to the country.

The firm has formed a joint venture with Japan‘s Matsushita and China‘s top telecoms equipment maker, Huawei Technologies, to develop 3G phones.

NEC now manufactures WCDMA mobile phones in China. Those models are exported to Asia, Europe and Oceania.

http://www.tdscdma-forum.org/EN/news/see.asp?id=819

Have a great day and great weekend all. Preppin for smokin some boston butt, turkey and fish all day tomorrow.

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