Swedish telecommunication giant Ericsson will invest US$1 billion in China over the next five years to further engage the world's largest mobile communications market, the company announced Wednesday.

The money will be used to improve Ericsson's manufacturing, research and development (R&D), and service in China, according to Ericsson President and CEO Carl Henic Svanberg.

"We not only see China as an interesting market, but this is a main hub for supply and a growing market when it comes to R&D," he said at the Ericsson Strategy & Technology Summit Wednesday.

The investment will allow Ericsson to win a third of the market for equipment that allows faster downloads of movies, music and games on handsets, according to Svanberg.

"Users are demanding more mobile content, operators are looking for new revenue sources and media companies need new distribution channels. This is in line with our vision of an all-communicating world and we are confident that the mobile content industry has wonderful potential," said Svanberg.

The 53-year-old CEO said he expects China to start issuing licences for such third-generation (3G) networks in the next six months after correcting technical glitches.

"What we can see is that the world would expect the networks to be up and running ahead of the Olympics and I think we are getting very close, and it's probably good timing now if it comes out in half a year or so," he said, adding that China is likely to spend US$10 billion to US$12 billion on 3G networks within three years of the issue of licences.

Svanberg also announced that in a strategic move in R&D co-operation, Ericsson has signed its first agreement with the Shanghai Research Centre for Wireless Communications (SHRCWC).

Under the agreement, Ericsson will collaborate with SHRCWC in undertaking research projects on future telecommunications technology such as Super 3G and 4G.

Ericsson has 10 R&D centres in the country employing 1,100 engineers, said Mats Olsson, Ericsson's president for business in China. The company has built a centre in Guangzhou for after-sales servicing of networks, and has a facility in Qingdao focusing on fixed-line broadband networks.

"We're in close co-operation with China Telecom and China Netcom in preparing for 3G," Olsson said. "We're also in development of service networks for China Telecom."

The company signed a co-operation deal with major Chinese telecommunication equipment provider ZTE in May on developing a 3G technology called time division synchronous code division multiple access (TD-SCDMA), a system supported by China.

It is now widely agreed that TD-SCDMA is almost certain to be deployed in China, the world's largest mobile communications market with over 300 million subscribers.

The home-grown TD-SCDMA standard has been tested in several rounds of trials organized by the Ministry of Information Industry and is believed to meet the requirements necessary for a commercial launch.

Ericsson, which on July 21 reported an 18 per cent profit increase to 5.8 billion kronor (US$749 million) in the second quarter of this year, said its Asia Pacific sales rose 8 percent in the period mainly on the back of growth in China and India.

The company expects the global mobile-phone market to reach 2 billion users this year, adding almost 1 million a day, said Svanberg.

Source: China Daily