Fri, Sep 10, 2004 page12

• Cisco's Chambers expects tough Asian competition

  • BLOOMBERG
  • • 
    • 
    • 

  Cisco Systems Inc, the world's largest maker of computer networking equipment, expects half of its top 12 competitors to come from Asia within five years as countries such as China boost investment in technology, Chief Executive John Chambers said.

  "The Chinese government is putting 25 percent of college graduates into computer science, math and sciences -- we put less than 10 percent," Chambers said at a Citigroup Smith Barney technology conference in New York.

  Huawei Technologies Co and ZTE Corp, China's biggest makers of telecommunications equipment, have won market share from Cisco offering lower prices for base stations, switches and other gear. Huawei said this week it's on course to reach $2 billion in overseas sales this year. That's equivalent to 40 percent of its total sales forecast, from 27 percent last year.

  "We believe we can meet our expectations for international sales," Huawei Senior Vice President Sun Yelin said in an interview at the International Telecommunication Union conference in Busan, South Korea, on Tuesday.

  Huawei and ZTE have benefited from operating in the world's largest phone market by users. Spending on network equipment by China Telecommunications Corp, China Mobile Communications Corp and other mainland carriers will increase 16 percent to $15.8 billion this year, market researcher IDC forecast in January.

  "Huawei and ZTE are two emerging giants in the networking and wireless segments of the market rapidly expanding outside China," the International Telecommunication Union said in a report issued this week. "Both companies initially targeted smaller overseas deals off the radar scope of western companies, but are increasingly going head-to-head against global vendors for choice contracts."

  KDDI Corp, Japan's second-largest mobile-phone operator, has yet to use networking equipment from a Chinese provider, though it may do so, said Yutaka Yasuda, the general manager of the technology division for the company's high-speed wireless services unit.

  "In the future there will be a possibility," especially if Chinese companies collaborate with Japanese equipment makers, he said in an interview at the International Telecommunication Union conference. "Further cost reduction will be driven down by Chinese manufacturers."

  China's large mobile-phone user base of 300 million subscribers will drive the country's technology development forward as both a consumer and producer, said Edward Yu, president of Analysys Consulting, a Beijing-based market research and consulting firm that tracks China's technology industry.

  Such a large user base means foreign companies from Cisco to Microsoft Corp must develop products that cater to the China market, he said. In addition, it means that more and more domestic private players will set up to cater to such a market.

  "Many new international technology products already are being developed in China because China has the No. 1 mobile market," Yu said. China's cell-phone users reached 310.2 million in July, more than the total US population, the state-run Xinhua news agency reported last month. The country had 299 million fixed-line connections, according to the report.

  First-half profit at ZTE, which along with Huawei is based in Shenzhen, almost tripled to 513.2 million yuan (US$62 million) on sales that doubled to 11.8 billion yuan, from 5.9 billion yuan, the company said on Aug. 31.

  ZTE was the first Chinese equipment-maker to win orders for the nation's first wireless network based on code division multiple access technology, taking share from Lucent Technologies Inc, Motorola Inc and other overseas manufacturers. The company also helped China's fixed-line phone companies expand a limited-range cordless-phone service that competes with mobile networks.

  The Chinese government has said it may issue high-speed wireless permits as early as next year. The third-generation networks will let users download movie clips and make video calls on mobile phones.
• Most Popular

  • 1

    Napoli’s title hopes shaken by late Genoa equalizer

  • 2

    Privately owned city in Kenya taking on corrupt officials

  • 3

    MOE to encourage foreigners to work in Taiwan

  • 4

    Kane tastes first title as Bayern bid farewell to Mueller

  • 5

    Former president Tsai departs for Lithuania