SHANGHAI, China-Last year, Siemens announced big plans to increase its mobile telecom market share in China. But Lothar Pauly, board member of the Information and Communication Mobile Group of Siemens, acknowledged he is not fully satisfied with the progress made during the past year. Siemens’ market share has stagnated around 10 percent, but according to Pauly, his company lost less market share to domestic competitors than Motorola and Nokia.
Domestic Chinese suppliers increased their market share of the handset market from a few percentages a couple of years ago to more than 20 percent in 2002. Siemens is continuously increasing its localization rate, which now stands at 75 percent for handsets and 60 percent for network equipment.
Siemens is also actively looking to the possibility of taking over mobile-phone manufacturing capability from Motorola and Ericsson in China, in case those companies should decide to sell part of their manufacturing capabilities.
On 24 October, Siemens launched its latest handset model, the S57, in the Asia-Pacific market. The mobile phone has multimedia message service (MMS) functionality and can be equipped with the QuickPic Camera IQP-500 for taking and transmitting pictures. The handset is advertised as the perfect companion for the urban generation and is meant to contribute to the population’s quality of life.
In May, Siemens moved its global headquarters for voice-centric mobile phones to Beijing. This means development, design, marketing and sales for the whole world is done in Beijing. Siemens divides its handsets into two categories-voice-centric phones, where the traditional function of making voice calls remains central, and feature-rich phones, where new functionality such as the capability to send and receive pictures and e-mail or listen to MP3-encoded songs is important. It is the first time the global headquarters of a Siemens product line has been relocated outside Germany.
Following the move of its voice-centric phones headquarters to Beijing, the voice team will almost double its numbers in China by the end of 2003.
Siemens is investing an additional 50 million euros (US$48.8 million) into the development of TD-SCDMA technology together with China’s Datang. Siemens has already built a test TD-SCDMA network in Beijing. Siemens expects the Chinese government to soon allocate bandwith for the TD-SCDMA networks, followed by licensing of mobile operators to build third-generation (3G) networks. Licensing will probably take place following the formation of a new Chinese government in March 2003.
Pauly emphasized that TD-SCDMA and W-CDMA, also known as UMTS, are compatible and complementary technologies. He expects China to also build networks based on cdma2000 technology.
Development of TD-SCDMA is almost complete with still some work to be done for the handover of phone calls to other networks. The intellectual property rights are largely in Chinese hands, but Siemens will earn some royalties to compensate its involvement in the development of the technology. Pauly underlined, however, that royalties will be put at a fair and favorable level, because Siemens is not in the business of making money from the sale of intellectual property rights, but from the sale of equipment and services. In the Chinese press, it is emphasized time and again that one of the advantages of TD-SCDMA is that the intellectual property rights are largely owned by Chinese companies.
Siemens Limited China has more than 50 operating companies in China with sales of 3.5 billion euros (US$3.4 billion) and 21,000 employees. It has a 60-percent share in Shanghai Siemens Mobile Communications (SSMC). The other partners in the joint venture are Shanghai Mobile Communications Corporation, SVA Information Industry and the First Research Institute of Telecommunications Science and Technology.
SSMC was established in May 1993. The production of handsets was expanded in October 2001 to 14 million units per year. In 2000, SSMC was ranked the 14th-largest foreign invested enterprise in China, and in 2001, it was ranked first as a foreign trade enterprise in Shanghai. The number of employees increased from less than 400 in 1997 to more than 2,400 in 2001. The company also produces mobile switching centers (MSCs) and base stations for GSM networks as well as for 3G TD-SCDMA and W-CDMA networks.
