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Thu, May 15, 2003 - Page 12 News List

Siemens, UTStarcom join pool of victims

BLOOMBERG , BEIJING

Siemens AG and UTStarcom Inc said SARS is hurting business in China as customers delay orders and quarantines keep engineers and sales forces from the field.

Siemens, which had sales of 3.6 billion euros (US$4.14 billion) in China last year, said the disease has slowed orders for its phone equipment, while hospitals are delaying purchases of its X-ray machines as they concentrate resources on fighting SARS.

UTStarcom said quarantine rules have delayed installation of a cordless phone system in Beijing.

Siemens, which has been operating in China for more than a century and employs 21,000 people in the country, and UTStarcom join a growing list of multinational companies that claim SARS is affecting sales. Last week Motorola Inc said it fired workers at its Tianjin factory, citing a SARS-induced slowdown in sales.

With SARS, "people would think this would be a heyday for Siemens," Ernst Behrens, president of Siemens Ltd, China, said in an interview. "That's not the case."

New phone-equipment orders from China Telecommunications Corp and China Netcom Corp had been brought to a ``standstill,'' he said.

The disease is hurting Siemens even in parts of the country not severely affected by the disease. In Shanghai, which has reported seven cases compared with Beijing's 2,347, engineers and sales people are avoiding trips to other provinces because of the city's mandatory two-week quarantine rule, Behrens said.

"Sales will go down sharply, not only because consumers can't go to shops, but also because salesman can't travel around the country," said Huang Yiping, an economist for Citigroup Inc in Hong Kong. "Even in areas where there aren't even cases, people are being more cautious."

So far, SARS hasn't cut production at Siemens' China factories because they are still working to fill orders signed before the SARS outbreak became widespread, Behrens said. That may change because new orders have slowed, he said.

UTStarcom says it can't produce enough handsets for the "Little Smart" network, which Wu estimates will expand to 25 million customers nationwide by year's end from the current 15 million.

Siemens and UTStarcom are still winning some new orders.

On Tuesday the company won a US$36 million order from China Mobile Communications Corp to install mobile phone network equipment in Shanghai and eastern Anhui Province, the company said in a statement. UTStarcom won a US$20 million order from China Telecom last week.

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