Ericsson might double its China spending in 5 years

Ericsson AB, the biggest maker of wireless telephone networks, said it will double investment in China to US$5 billion in five years to expand its share in the fastest-growing telecommunications market.

Ericsson's move comes as its rivals said they will boost investment in China and Beijing prepares to host the 2008 Olympics. Motorola Inc, the second-largest mobile-phone maker, yesterday said it will triple its investment in China in the next five years to US$10 billion from US$3.4 billion.

"China is a magnet," said Bertrand Bidaud, director of Asia Pacific telecommunications research at Gartner Group in Singapore.

China, now the largest mobile-phone market, accounts for half of Ericsson's business in Asia, said Ragnar Back, an executive vice president at Ericsson. It will invest the US$5 billion, along with its partners, in developing, making and marketing products.

Gartner forecasts 343 million people in China, or about 26 percent of the population, will use a mobile phone by 2005, up from 120 million, or 10 percent, now.

Ericsson, headed toward its first annual loss in more than half a century, relinquished its mobile-phone making business to a venture with Japan's Sony Corp to cut costs and better focus on producing network gear. Ericsson said it cut 4,700 jobs in October, taking its workforce to 88,200.

The company said it's ahead of schedule to cut costs for the full year by 7 billion kronor (US$662 million).