German telecoms gear supplier Siemens says it will set up more research and development (R&D) offices and look for merger and acquisition (M & A) opportunities in China.

It is all part of its attempt to become a leader in China's emerging third-generation (3G) market, according to senior executive Christoph Caselitz, president of Siemens' mobile networks division.

In an interview with China Daily on the sidelines of the 3G Congress and Exhibition in Hong Kong, he said he believed China will issue 3G licences next year and "this time, I believe it will not be delayed."

"We have been waiting for it (the release of licences) for a long time," said Caselitz. "But I think the waiting is worthwhile, as everybody knows China is a huge market."

Caselitz said that by 2010 37 per cent of 3G users will be in Asia, while China will be the "focus of the market."

Caselitz said his division will spend hundreds of millions of euros in Asia this year. A big portion of the money will go to China.

Asian sales of Siemens' mobile network business grew by 20 per cent in the past fiscal year.

"We will establish more R&D centres (for the development of 3G) in several Chinese provinces and invest heavily," he said, refusing to be more specific. He added that China has an abundant supply of IT professionals.

Caselitz did not specify Siemens' next mergers and acquisitions move in China, only saying "we are looking for such opportunities. If there are good opportunities, we will definitely grab the chance."

It has been reported that Siemens may be interested in buying Harbour Networks Ltd, a networking equipment company in China.

Siemens already has a joint venture with China's leading telecoms equipment maker Huawei Technologies for the development of China's homegrown 3G standard, TD-SCDMA. With this, Siemens expects to increase its market share in China's 3G era, which many expect to generate more than US$10 billion worth of new purchasing in the first three years after licences are awarded.

Siemens is one of the major players in the Chinese telecoms market. It holds 6 to 7 per cent of the mobile network equipment contracts for China Mobile, the nation's leading mobile carrier, and 25 to 26 per cent of GSM (the Global System for Mobile Communications) network contracts for the No 2 player, China Unicom, according to research firm Gartner.

Siemens was the world's third-biggest mobile telecoms network gear supplier last year with about 13 per cent of the market globally, behind industry leader Ericsson at 27 per cent and Nokia at 14 per cent, according to Gartner.

The fourth-largest player, Motorola Inc, had about 11 per cent of a global wireless infrastructure market worth US$49 billion last year, which is expected to grow by 10 per cent in 2005.

In June, Siemens sold its loss-making mobile phone business to the Taiwan-based BenQ Group

Caselitz said Siemens will not re-enter the mobile handset business by acquiring other cellular phone makers.

Source: China Daily