Open SesameCDMA Firms Gear Up for Chinese Market
The door is now fully open for Korean telecommunications service companies and
equipment manufacturers to make a full-fledged advancement into China's digital
mobile service market.
Until now, China's mobile service had been restricted to the use of the global system
for mobile communications (GSM), which is based on European technology, but the
country's mobile service companies are due to launch CDMA mobile service starting
from Tuesday. As such, global CDMA service providers and equipment makers will
likely wage a cutthroat competition to win a larger piece of China's coveted market.
China Unicom, the second largest mobile service company in China, plans to start
the CDMA service at around 300 major Chinese cities, including Beijing, Shanghai
and Shenzhen, and gradually expand it to nationwide.
The Chinese company is going to provide the CDMA service in IS-95B, which has a
data transmission speed of up to 56 kilobytes per second, identical to the one that
has been in service in Korea, suggesting Korea's industry is going to enjoy an edge
in the competition for the Chinese market.
An official at Samsung Electronics said his company had trouble making any progress
in the Chinese market as mobile service in the country had been provided
predominantly in GSM mode. He said China's launching of the CDMA service will help
increase his company's exports.
Sources predicted that Chinese subscribers to CDMA service would expand rapidly,
more than double each year. OVUM, a telecommunications market research
company, went as far as to predict that China's CDMA subscribers will increase to
five million this year and jump to 32 million next year.
Korea's exports of CDMA equipment to China amounted to US$10 billion last year
and is expected to snowball to US$15 billion this year on the back of the rising CDMA
demands in China.
Korean CDMA equipment manufacturers have been scrambling to expand their
operations into China recently. Samsung Electronics invested US$29 million to set up
a CDMA mobile handset production joint venture in Shenzhen. Korea's flagship firm
said that, in the production joint venture, about two million CDMA handsets will be
produced each year.
LG Electronics has been given the Chinese government's permission to roll out CDMA
equipment in the communist country and is preparing to launch production. One
official at LG Electronics said his company's Chinese production units have a built-in
designing capability for the cellular sets, adding that about 1.2 million CDMA
handsets will be produced in the plant.
Mid-size Korean mobile handset makers are also pressing ahead with tapping the
Chinese market. Sewon Telecom and Pentech are getting ready to export handsets
on an OEM basis. Sewon, in particular, plans to ship a total of 400,000 units of CDMA
handsets to China this year.
Another Korean firm, Telson Electronics, is about to export a total of 340,000 units of
CDMA handsets to China by the end of March. Market analysts, however, pointed out
that Korean handset firms' prospects for the crowded Chinese CDMA market are not
promising.
Global giants such as Motorola and Sony are all pressing ahead with their bid to
launch local production of CDMA units.