Motorola heads China tech orders

Home>>Business

Last updated at: (Beijing Time) Tuesday, January 13, 2004

Motorola heads China tech orders

DISCUSSION

CHINESE

SEND TO FRIEND

Motorola Inc. and Lucent Technologies Inc. will lead U.S. and other companies on Tuesday in signing more than US$2 billion of sales to China's top telecoms and computer firms, sources close to the deals said.

Motorola's wireless equipment unit will announce deals worth more than US$1 billion with cellphone carriers China Unicom Ltd. and China Mobile (Hong Kong) Ltd., said one source who asked not to be named.

The deals, which will be fulfilled over an extended period, will be announced in Washington and come as China falls under growing pressure to ease its trade imbalance with the United States.

They follow announcements in November of big Chinese orders for U.S. goods ranging from airplanes and automobiles to soybeans.

"There is definitely an element of political theater in this, but it correctly sends a strong message about the importance of bilateral relations and bilateral trade," said Patrick Horgan, managing director of consultants APCO Worldwide in Beijing.

Lucent will receive about US$350 million in contracts, while Cisco Systems Inc. will get about $140 million from Unicom and China Telecom Corp., China's biggest fixed-line carrier, according to other sources who spoke on condition of anonymity.

UTStarcom, which specializes in telecoms equipment for a low-end wireless service offered by China Telecom, will announce a contract worth US$200 million over 12 months, according to another source.

Fast-growing China has been a relative bright spot for global telecoms equipment makers, which have endured lean years since spending on network infrastructure plunged after the bursting of the technology bubble in 2000.

INTEL, NORTEL

Intel Corp., the world's biggest semiconductor maker, will announce memorandums of understanding to supply chips to China's top two PC makers, Legend Group Ltd. and Shanghai Founder Yanzhong Technology.

Canada's Nortel Networks and Sweden's Ericsson are the only non-U.S. companies expected to announce deals at the event. Both will sign agreements with China Unicom, with Nortel's contract worth around US$150 million.

An Ericsson executive, who spoke on condition his name not be used, said the purchases would be spread out over time.

"The deal won't dramatically change Ericsson China's yearly outlook," he said. "This is a Chinese IT purchase delegation, so they will sign some deals in the U.S. to show that there are big volume imports from the U.S."

Officials from Motorola, UTStarcom and Intel declined to comment, other than to confirm they will participate in the lunch-time contract signing ceremony in Washington.

The signing of so many contracts at one time is partly political, Horgan said.

The United States says its trade deficit with China reached more than $100 billion in 2002, and was expected to rise more than 20 per cent this year. Last week, China said its trade surplus for 2003 reached US$25.5 billion.

To ease the imbalance, Washington has pressured China over the last year to import more U.S. goods and let the value of its currency appreciate. The yuan currency is pegged to the dollar.

"As China prioritizes its trade relations with the U.S., this is clearly an area where continued strong trade relations between two majors players makes sense," Horgan said.

China signed a deal to buy 30 Boeing Co airliners and engines from General Electric Co. for $1.7 billion in November, part of a buying spree that Washington hailed as a "big victory" for the companies.

Motorola shares rose 3.12 per cent on Monday after news of the telecoms deals first appeared, while Lucent shares jumped 4.31 per cent, UTStarcom shares closed up 4.01 per cent and Cisco shares gained 2.08 per cent.

The buying trip comes just one month after President Bush warned Taiwan, China's island rival, against changing the status quo with the mainland, delighting visiting Chinese Premier Wen Jiabao.

Legal experts and executives had said it was a good time for U.S. firms, which have complained of slow liberalization in the telecoms sector, to seek some sort of quid pro quo.

(Source:agencies)

Questions?Comments? Click here

Motorola targets Chinese home appliances market

Motorola kills launch of new cam-phone in China

Motorola launches new office complex in Beijing

Exploration rover "Spirit" lands safely on Mars ( 9 Messages)

Two major state banks to pilot joint-stock system ( 3 Messages)

China pondering its own "green card" system ( 16 Messages)

Roaring BMW: Was it "road rage" or an accident? ( 2 Messages)

Beijing's traffic no longer a headache by year 2008 ( 5 Messages)