China Sets Threshold for 3G Mobile Phone Makers

From Forbes.com: China Sets Threshold for 3G Mobile Phone Makers

"China rules that manufacturers must present their applications and obtain approval before producing and selling mobile telecommunication equipment and mobile phones, including 2G and3G switch equipment, base station equipment, and cell phones."

"China also rules that the registered capital of the new mobile phone manufacturing project must be no less than CNY 200 million (US$ 23 million), and the manufacturers must establish research and development centers, owning perfect development platforms and research environment, having designing capability in complete phones and cell circuit hardware, and etc." Read more

Shanda-Sina Deal: Yahoo! Denies Interest in Sina Stake

From Forbes.com: Yahoo! Denies Chatter Re Anti-Shanda Sina Stake

"Over the weekend, rumors had amassed that Yahoo! planned to grab a stake in Beijing-based Web portal operator Sina. ... Yahoo! was expected to make the investment in order to head off a hostile takeover of Sina by online gaming firm Shanda Interactive Entertainment. ... But in the aftermath, Yahoo! denied it would acquire Sina shares."

"The National Business Daily quoted Yahoo China President Zhou Hongyi as saying, "It's neither possible nor meaningful for Yahoo! to get involved now." Read more

Shanda-Sina Deal: Shanda Couldn't Wait To Spend The Money

From ChinaTechNews: Shanda Couldn't Wait To Spend The Money

"When I wrote a column about the Shanda IPO several months ago, I knew Shanda might decide to squander away its money, but I didn't know how fast my prediction would come true. Fresh from raising upwards of US$200-300 million in both the equity and debt markets, Shanda has now, in the space of a few short months, decided to spend most of the money on a marginally-related company. This is truly remarkable and could even be a world record."

"There are two problems with this deal. First, when Shanda did its IPO last year it marketed itself as an online games creator, which it is. The money it asked from investors was presumably to go to developing Shanda's online games. But Sina.com is a web portal. Sure, Sina has an online games business but that is only one part of Sina's company. So Shanda is using its IPO money on something that bears little relationship to its reason for asking for the money." Read more

U.S. Companies Not Keeping Pace With New Chinese and Indian Competition in Technology and Telecom

From RedNova: U.S. Companies Not Keeping Pace With New Competitive World Order in Technology and Telecom, Study Finds

"A new world order of competition is emerging in the global technology and telecommunications industries. But most North American companies are not keeping pace with the changes, according to a new study conducted by two executive thought leadership organizations, in cooperation with global management consulting firm A.T. Kearney. In fact, two-thirds of the more than 300 North American executives surveyed say they have not even instituted formal practices for tracking and analyzing their competition."

""U.S. companies risk falling behind global forces that are reshaping the competitive landscape in technology and telecommunications," said John Ciacchella, a vice president in A.T. Kearney's High Technology Practice. "The shift from enterprise to consumer, new global players from China and India, industry consolidation, and next wave technologies, such as VoIP, digital media, 3G, broadband to the home and WiFi/WiMax -- are all factors driving big dislocations in the market. ... " Read more

SOHU.COM Announces Launch of Upgraded Search Engine SoGou 2.0

From Sohu.com Press Release: SOHU Announces Launch of Upgraded Search Engine SoGou 2.0

"SOHU.COM Inc. (Nasdaq: SOHU), China's leading online media, communications, commerce and mobile value-added services company, today announced it has launched the upgraded version of its search engine SoGou with an expanded breadth of 500 million Chinese language indexed web pages, higher updating speed and shorter search time."

"This is the year in which our prime focus is on bringing to the market a superior search product based on powerful technology that gives our users an excellent search experience. Search is one of the most promising areas of growth in the Chinese Internet market and our goal is to be a top player in this market," said Charles Zhang, Chairman and CEO of SOHU." Read more

How China Will Change Your Business

From Inc.com: How China Will Change Your Business

"Fourteen things every entrepreneur should know about the capitalist explosion heading our way."

1. China's economy is much larger than the official numbers show.
2. The growth of China's economy has no equal in modern history.
3. China is winning the global competition for investment capital.
4. China can be a bully.
5. China's economy is an entrepreneurial economy.
6. The most daunting thing about China is not its ability to make cheap consumer goods.
7. China is closing the research and development gap -- fast.
8. China now sets the global benchmark for prices.
9. China's growth is making raw materials more expensive.
10. No company has embraced China's potential more vigorously than Wal-Mart.
11. There are hidden costs associated with doing business in China.
12. Piracy is a problem.
13. China's heavy buying of U.S. debt has lowered the cost of money in the U.S.
14. Americans and Chinese have become reliant on each other's most controversial habits.

Read more

China's Net Gamers: Ready to Rumble

From BusinessWeek: China's Net Gamers: Ready to Rumble

"On Feb. 18, the Shanghai gaming company (Shanda Interactive) revealed that it had quietly accumulated almost 20% of Sina's stock. That made Shanda the largest shareholder and has set the stage for something that China has rarely if ever seen: a hostile takeover battle. The battle could be all the more hostile because Shanda and Sina are competitors to win the allegiance of China's growing population of online gaming fans."

"The Chinese government, recognizing that online gaming has the potential to be a blockbuster business, is pushing several measures to support the industry. Beijing has launched an online-gaming project. In typical communist fashion, it's a five-year plan to publish 100 homegrown games."

"Another Shanghai-based operator, The9, recently went public on Nasdaq. And Sina has struck a partnership with NCsoft, the premier Korean gaming company. The increased competition means Shanda must find ways to grow and diversify. One way is to reduce reliance on PCs by making Shanda's games available on TV. Shanda has been working with Intel and graphics-chip designer ATI to develop a set-top box to do just that." Read more

PCCW partners with China Netcom (China Network)

From MarketWatch: PCCW partners with China Netcom

"China Network and PCCW agreed to from a "strategic committee" and working groups to scout business opportunities, the Wall Street Journal reported on its website.

The plan comes on the heels of an agreement for China Network, or China Netcom, to buy a 20 percent stake in PCCW for about $1 billion, the Journal reported.

China Netcom Chairman Zhang Chunjiang said the companies could team in a number of areas, including broadband television, mobile phone service and real estate, according to the report. Zhang also said the companies could combine parts of their international businesses, the Journal reported." Read more

China's Cellular-Gear Maker ZTE - A Global Titan Telecom?

From BusinessWeek:

"China's No. 2 cellular-gear maker (ZTE) has launched a campaign to break into the ranks of Nokia and Motorola"

"ZT-who? The company, based just north of Hong Kong in Shenzhen, is little known in the West. But it's already China's second-biggest telecom-equipment vendor, after crosstown rival Huawei Technologies Co. Sales of its handsets, base stations, switches, software, and broadband networking gear grew 35%, to $4.1 billion, last year. Profits jumped 50%, to an estimated $186 million, according to brokerage DBS Vickers Securities. And exports soared 170%, to $1.6 billion."

"As ZTE picks up the pace, both it and Huawei are shaking up the telecom industry worldwide. With their low-cost manufacturing, vast pools of engineering talent, and abundant supply of customer-service technicians, the Shenzhen pair "really could change the structure of the industry,"says Andrew Chetham, an analyst with Gartner Inc. in Hong Kong. "In five years' time, Western companies [won't be able to] keep up with their research and development spending because of their low-cost advantage." Read more

Chase Begins for Chinese Gamers - Sina Deal Puts China in Play

From TheStreet: Sina Deal Puts China in Play

"The firing gun that started the race was a below-the-radar purchase of a 19.5% stake in Sina (SINA), China's biggest Internet portal, by Shanda Interactive Entertainment (SNDA), China's leader in online games. ... Shanda is now in a position to play kingmaker at Sina," said Jason Brueschke, an analyst with Pacific Growth Equities, which performs no underwriting for companies. "They can now dictate, if not strongly influence, whether Sina is bought and who it would be sold to."

"The battle for Sina might end up coming down to two unlikely rivals: Yahoo! (YHOO), the American online media giant that analysts say has been quietly courting Sina for a takeover for some time, and Softbank, a Japanese venture capital firm that is Yahoo!'s co-investor in Yahoo! Japan. Softbank is a key backer in the SB Asia Infrastructure Fund, which controls a 15% stake in Shanda."

"But for both companies -- and for any non-Chinese company seeking a strong foothold in China's Internet sector -- there are few options beyond Sina, which is only 15% owned by Stone Electronic and directors. According to Goldman Sachs analyst James Mitchell, the other major Internet companies in China -- such as Shanda, NetEase (NTES) and Tencent -- are majority-owned by founders and directors. The closest is Sohu.com (SOHU), which is 40% owned by controlling shareholders." Read more

Huawei threatens incumbent telecom equipment vendors

From Light Reading: Huawei Gains Ground in HR Survey

"Incumbent telecom equipment vendors should keep an eye out for Chinese manufacturer Huawei Technologies Co. Ltd., which is gaining ground quickly as a market leader, according to Heavy Reading's 2005 Wireline Telecom Equipment Market Perception Study, which was released today."

"Huawei's rapid rise in Europe shows that service providers are willing to break from existing suppliers for strategic equipment purchases, a fact that has to concern Huawei competitors. More than 33 percent of respondents ranked Huawei as the top vendor based on price, a significant lead over #2 Juniper Networks Inc., which nabbed 25.4 percent of the vote."

"Huawei's most remarkable score came in the service and support category, where it received a rating of 16.7 percent, fourth-best in this group," the authors write." Read more

The9: Unaudited Fourth Quarter and Fiscal Year 2004 Financial Results

From ChinaTechNews: The9 Shows Small Increase In Quarterly Revenue For Online Games

"For the fourth quarter 2004, The9 Limited (NCTY) reported net revenues of US$1.0 million, an increase of 0.6% from the third quarter of the year. The company announced these unaudited results today.

For the entire year of 2004, the company says its net revenues increased by 111.9% to RMB34.7 million (US$4.2 million) from RMB16.4 million (US$2.0 million) in 2003, the result of an increase in revenues from game operating support, website solutions and advertisement and SMS services, offset in part by the decrease in revenues from online game services and other products and services." Read more

Nokia says China will soon be its top market

From International Herald Tribune: Nokia says China will soon be its top market

"Sales in China currently account for 10 percent of Nokia's total revenue, second only to the United States at 13 percent, but rapid growth in coming years is likely to push China beyond that, Jorma Ollila, the chief executive, said during a visit to Beijing. "I would not be surprised to see China take up the No. 1 position in the next three years," he said."

"We expect that strong growth to continue," he said, adding that China was likely to account for a quarter of new mobile phone users worldwide over the next five years as its subscribers grow from 330 to 700 million."

".., analysts said China would be a focus of mobile phone growth in coming years, especially as growth in other mature markets slows. China is adding five million mobile subscribers every month, and that growth is likely to continue." Read more

China's Hungry for More - Prospects for Chinese Internet Stocks Remain Strong

From Fool.com: China's Hungry for More

"There is still heady growth to be found in China. With NetEase.com (Nasdaq: NTES) posting healthy earnings last night -- just weeks after ... Shanda Interactive (Nasdaq: SNDA) came through with a nod-worthy quarter -- is 2005 just 2003 revisited?"

"While both NetEase and Shanda have dipped since they were recommended as part of the Rule Breakers newsletter service, their outlooks remain positive. Some of the world's biggest dot-com players seem to agree after buying into the region over the past year. Amazon acquired online retailer Joyo.com, while eBay scooped up Chinese auction site EachNet. Yahoo! partnered with SINA to launch an auction site last year as well. 2005 may be a bit different now that Shanda is taking an interest in SINA. In other words, Chinese companies may be looking to nibble at their own, and that kind of consolidation may be just the catalyst to reintroduce investors to the region's equity potential." Read more

Sina fights off unwelcome bidders

From BBC News: Sina fights off unwelcome bidders

"Sina came up with the scheme within days of online games firm Shanda Interactive Entertainment revealing it had acquired 19.5% of Sina's shares.
If Shanda lifts its holding to 20%, Sina shareholders get the right to buy Sina shares at half price. The scheme - known as a "poison pill" would allow Sina to issue new shares. " Read more

Report on Microsoft’s Beijing research lab (Microsoft Advanced Technology Center (ATC))

From TechnologyReview: Microsoft: Getting from "R" to "D"

"Can a firm have too much innovation to handle?
It happens. And that problem was the dominant issue for a small group of executives from Microsoft’s Beijing research lab when they held a retreat in November 2002 at a spa in Zhuhai, not far from China’s border with Macao."

"Microsoft’s Advanced Technology Center (ATC) opened in November 2003 with 20 employees and a couple of projects. By late last year, after receiving more than 30,000 résumés from around China and sparking keen demand among Microsoft’s business divisions, it had around 100 employees, with some 17 major projects and scores of minor ones on its books; this year, the ATC is set to double in size. In the next few years, the center expects to be the key technology transfer point for a host of new products, from Web-search technologies to mobile applications and home entertainment systems. On the strength of these innovations, Hongjiang Zhang, the center’s charter director, hopes to provide a powerful alternative to Microsoft’s traditional strategy of creating products in the U.S., spiraling into Europe, and then adapting them for the Chinese market. “China is still emerging, but China is no longer just a follower,” he says. “They are starting to lead.” Read more

NetEase.com Fourth-Quarter Profit Rises - Online Games Are Main Revenue Driver

From ChinaTechNews: Online Games Are Netease's Main Revenue Driver

"For the fourth quarter ended December 31, 2004, Netease.com reported total net revenues of US$31.6 million, a 9.7% increase over total net revenues of US$28.8 million for the preceding quarter and a 55.1% increase over total revenues of US$20.4 million for the corresponding period in 2003."

"The main revenue driver for the fourth quarter was online game services which grew to RMB196.8 million (US$23.8 million), a 22.6% increase over RMB160.5 million (US$19.4 million) for the third quarter. Performance of Netease's two self-developed titles, Westward Journey Online Version 2.0 and Fantasy Westward Journey Online, was strong during the quarter, as highlighted by record average concurrent user numbers of 159,000 and 146,000, respectively, for the fourth quarter in 2004." Read more

Ctrip Reports Fourth Quarter and Full Year 2004 Unaudited Financial Results

From ArriveNet: Ctrip Reports Fourth Quarter and Full Year 2004 Unaudited Financial Results

"Highlights for the fourth quarter of 2004:
-- Net revenues were RMB98.5 million (US$11.9 million) in the fourth quarter of 2004, up 46% year-on-year. -- Operating income was RMB33.0 million (US$4.0 million) in the fourth quarter of 2004, up 49% year-on-year. -- Net income was RMB41.6 million (US$5.0 million) in the fourth quarter of 2004, up 69% year-on-year. Fully diluted earnings per ADS were RMB2.60 (US$0.31) against the original guidance of US$ 0.24 to US$ 0.25 per ADS. -- " Read more

SOHU.COM Announces Completion of Stock Repurchase Program

From prnewswire: SOHU.COM Announces Completion of Stock Repurchase Program; Repurchased 6% of Outstanding Shares

"SOHU.COM Inc.(Nasdaq: SOHU), China's leading online media, communications, commerce andmobile value-added services company, today announced it has repurchased 885,605 shares of common stock between February 10 and February 17, 2005. SOHU reports that in the period from February 10 to February 17, 2005, it purchased 885,605 shares at an average price per share of US$15.66, for total consideration of US$13,873,000 including a brokerage commission of US$0.03 pershare." Read more

Shanda-Sina Deal: Counterbid from other firms possible

From BBC News: China's Shanda buys stake in Sina

"The move may be a precursor to a full takeover, with analysts saying that a better-known international firm may also now show an interest in Sina."
China Net Investor: Yahoo! ??? -Yahoo and Sina jointly run the Chinese auction service 1Pai.

"There could still be some potential parties that could still counter bid," said Wallace Cheung, an analyst at DBS Vickers. "Even though Shanda has 20% of Sina, they still have quite a long way to take full control." However, Mr Cheung noted that a foreign company trying to take control of a Chinese internet portal firm, with its ability to filter and pass on news, may not be viewed very favourably by Beijing." Read more

China is No 1 mobile phone maker

From rediff.com: China is No 1 mobile phone maker

"China has become the world's largest mobile phone producer by churning out 240 million units in 2004 and the figure is expected to increase to over 500 million this year, a report said on Monday. Out of the total production, about 140 million units were exported, the highest number in the world."
"There will be 40 (!) more firms to start manufacturing mobile phones this year. The total annual production amount may exceed 500 million units. This is more than 80 per cent of the world's total consumption," Xiao Chang, a senior economist of China Information Industry Association, said."
"Between 1999 and 2004, foreign investors have injected about $3.6 billion into China. They have been establishing technology research centres for mobile telecommunications. Meanwhile, domestic firms have achieved substantial progress in both production and sales. Their market share is now above 50 per cent, the report said." Read more

Speech by Stephen Green CEO HSBC: 'The rise and rise of Asia'

From Lancaster University: 'The rise and rise of Asia'
Speech by Stephen Green CEO HSBC

"I want to talk about a phenomenon that we at HSBC believe will fundamentally reshape the world’s economic landscape in the decades ahead. The rise and rise of Asia."

"The pace of change in China has been so rapid, and so extraordinary, that people are only now beginning to adjust intellectually to the reality of China as an economic power. In virtually every industry in the next 20 years, China will make its presence felt, and there are encouraging signs that, at last, the West is beginning to take this in. ... Today, everyone needs a China strategy."

" China is dominating low-end markets, but manufacturers who comfort themselves that they will be content with that, and leave the value-added products to established American, European or Asian companies, are making a grave mistake."

"... the desire to rise up the value chain is very evident. Huawei Technologies, a leading Chinese hi-tech company, employs 10,000 R&D workers – almost half of its total workforce – and invests no less than 10 per cent of its sales revenues in R&D."

"The Asian economic miracle produced a 40-year period of above average economic growth in countries like Japan, Taiwan and Singapore. If China were to follow the same pattern, it may only be halfway along its amazing economic journey." Full text of Stephen Green's speech

Shanda Discloses Stake in Sina Corp.

Press Release: Shanda Discloses Stake in Sina Corp.
Source: Shanda Interactive Entertainment Limited

SHANGHAI, China, Feb. 18 /Xinhua-PRNewswire/ -- Shanda Interactive Entertainment Limited (Nasdaq: SNDA) today disclosed that as of February 10, 2005 it has, together with its controlling shareholder Skyline Media Limited, acquired approximately 19.5% of the outstanding ordinary shares of Sina Corporation (Nasdaq: SINA) through open market purchases. Read more

Huawei Unveils Newish IP DSLAM in London on Monday; SmartAX MA5600 IP DSLAM

From LightReading: Huawei Unveils Newish IP DSLAM

"Huawei Technologies Co. Ltd. is to unveil its latest IP DSLAM in London on Monday at the 21st Century Communications World Forum event, in a bid to attract the attention of Europe's triple-play hopefuls."

"The timing and location of Huawei's MA5600 launch are significant. The topic of delivering TV and video over broadband is hot in Europe, and most of the continent's leading carriers, including Belgacom, Deutsche Telekom AG, France Telecom SA, TeliaSonera AB, and Telecom Italia SpA, are attending the event" Read more

China making great leap forward in tech

From ZDNet: China making great leap forward in tech

"China's growth into a nation that leads in the use of broadband technology, and the changing role of its manufacturing companies from just assemblers to designers, were among the trends analysts discussed at a conference ... Thursday."

"If you're resting on the belief that design will continue to only be done in Europe or the states, you may need to reconsider that." Abelson pointed to cellular handsets as an example. Many of the major manufacturers of handsets are Chinese companies, but in 2002 only 10 percent of handsets made in China were designed in house by the companies that made them. That figure will increase to 40 percent by 2008. "

"Chinese telecommunications companies will increase the installation of broadband technology to spur use of their wired networks. The result will be that by 2008, China will be the leading user of broadband technology in homes." Read more

China online games sector battles foreign domination ; Shanda, Netease, The9

From TheStandard: China online games sector battles foreign domination

"China's domestic online games publishers have declared war on foreign domination of an industry that is expected to be worth more than 10 billion yuan (approx. 1.3 billion US dollars) by 2009. ... Foreign online games companies accounted for 70 percent of those sales. ... . "

"Online games in China were once the preserve of foreigners, but a domestic industry began to emerge at the same time as online entertainment companies like Shanda, Netease and The9.
China last month ordered the General Administration of Press and Publication (GAPP) to take the responsibility for regulating the online games industry."

"Apart from controlling imports of online games, GAPP will also implement policies to help domestic online games producers win a bigger market share by developing games on Chinese themes, he said. They would be encouraged to develop 100 Chinese online games on nationalistic themes in the coming five years. ... Now, only 10 foreign-made games per year are allowed into the mainland market. Last year, 30 or 40 were imported." Read more

Sina News: UBS Lowers Price Target to $30; Lawsuit Looms

From PacificEpoch: UBS Lowers Sina Price Target To US$30

"UBS lowered its price target for Sina from US$35 to US$30 on Wednesday. However, UBS maintained a Buy 2 rating for the stock. UBS' chief concern regarding Sina is the company's lack of growth potential. According to UBS, online gaming is the only sector that offers significant growth potential for Sina and Sina needs to internally develop and launch one or more massively multiplayer online role playing games with 100,000 or more players."

From ChinaTechNews: Lawsuit Looms Over Sina

"At least four separate law firms in the United States have issued press releases notifying investors that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of all securities purchasers of Sina between October 26, 2004 and February 7, 2005." Read more

China's ZTE eyes Siemens' mobile

From AustralianIT.com: China's ZTE eyes Siemens' mobile

"Leading Chinese telecoms equipment maker ZTE is reportedly among the candidates for a possible mobile phone partnership with German electronics giant Siemens.
The list of potential tie-up partners for Siemens' loss-making mobile phone business is growing and already includes two other Chinese firms, Ningbo Bird and Huawei, South Korean group LG Electronics and Japan's NEC."

China's Businesses Thrive on the Web

From npr: China's Businesses Thrive on the Web
By Rob Gifford

"Recognizing the Internet's power, China's Communist government has embraced and developed it. The Web is now transforming the way business is done in China." Listen to the audio report

Companies mentioned in the report: Alibaba.com (Chinas B2B giant), Dangdang.com (China's largest online Chinese book retailer)

Open Letter to Henry Blodget - Doing Business in China

From ChinaTechNews: Henry Blodget Does China
By Perry Wu

"First, most foreign companies in China fail. That begs the question: why do they still keep on coming? The standard answer is that with a population of 1.3 billion, you can't afford to ignore China. It is too big, too important, has too much potential to ignore. That might be true, but I think there is a different reason. ... The reason has much in common, Henry, with why people poured money into Internet companies in the late '90s."

"When a company wants to "conquer the Chinese market," the company should be reminded that even China Mobile has different services, prices, and business plans for each of China's provinces. Add to that, China Mobile only recently was able to standardize wireless short messaging services (SMS) among most of its provincial outposts. Now if China Mobile can't localize and standardize in each province after a couple years, no foreigner should expect to be able to do anything similar in less than an annum multiple of ten."

"Anthony Lok, managing director at Bank of China International in Hong Kong, said a few days ago: "Everyone sees 1.3 billion people buying things online, but it turns out that 800 million of them are sitting on the farm." This sums it all up for you."

"Investing in one of China's many website portals is an example of investing in most other industries in the Middle Kingdom. Pretend you are an emperor whose concubines are a group of quintuplet sisters (true, a small group for an emperor like yourself) and you want one to bear you a son. This is the type of crapshoot you have as you wager on which portal will be China's Yahoo. Though these companies have billion-dollar valuations, that there are so many identical (Sohu.com, Sina.com, Netease.com, Tom.com, et al.) offerings for users and advertisers should make you shudder. How can such identical companies exist online?"

"Libraries are filled with some good, and some poor, writings on what it takes to do business in China. But just as Oscar Wilde described marriage as the "triumph of imagination over intelligence," I think many foreigners in China have fallen in love with a fantasyland." Read more

Henry Blodget, the disgraced bubble-era analyst, is now a columnist for the online magazine Slate. He has written recently about business and investment in China:
Go East, Young Man
Where's My $58 Million, Madame Wu?
Caged Hedgehogs, Car Smugglers, and Guanxi
The Real "Great Leap Forward"

China and India: An Opportunity, and A Threat to Western Mobile Industry

From TheFeature: China and India: An Opportunity, and A Threat

"The mobile industry typically thinks of India and China in terms of opportunity -- but the reality is that they are an increasing threat as well. With a combined population of up to 3 billion and rapid predicted growth in mobile usage, much of the talk at 3GSM is about the opportunity in India and China. Yes, vendors realize that they are facing increasingly fierce domestic competitors in the two markets. Take the Chinese handset market, where the domestic vendors now claim over 50% of the market. But the threat that is usually ignored is Chinese and Indian vendors entering European and US markets."

"Moving from the general to the specific, let's take a look at three of China's largest infrastructure players. Huawei, UTStarcom and ZTE earned around 1% of their revenues outside China in 2000; in 2004, the figure is expected to be around 33%. Chinese researchers Norson Consulting expect this proportion to rise to 70% for Huawei, and 80% for both UTStarcom and ZTE by 2008. The majority of international sales for Huawei and ZTE are in mobile infrastructure."

"From Western vendors dominating the Chinese handset market, domestic vendors now claim over 50% (although this figure is hard to assess). What is clear is that the local vendors have used their domestic knowledge to fight back ... . Chinese vendor TCL has already joined the major leagues by forming a joint venture with Alcatel. Formed in August 2004, TCL & Alcatel Mobile Phones (TAMP) is 55% owned by TCL, with Alcatel owning the remaining 45%. Other major Western vendors such as Siemens have also partnered with Chinese vendors to reduce their exposure to the market.
A different approach is being taken by Ningbo Bird, which had total handset sales of around 15 million in 2004, with 3 million outside China. In 2003, it established Bird International in Hong Kong, and grew international sales by 500% in 2004 and has plans to sell 20 million handsets outside China a year by 2006. Its key differentiators have been cost and innovative designs." Read more

China's Greatest Tech Myths - IBM-Lenovo deal, Linux, Piracy

From ChinaTechNews: China's Greatest Tech Myths
By Steven Schwankert

1. The IBM-Lenovo deal represents the arrival of Chinese companies on the international stage
"What few seem to consider is that Lenovo did not go to IBM with the intention of buying its PC division. IBM decided to axe the increasingly commoditized businesses because, as former GE CEO Jack Welch would have put it, it's yesterday's business."

2. Linux will be huge in China.
"A guy the Grouch knows who heads an IT department at a state-run Chinese publishing house came aboard and decided that he would migrate all of the publisher's electronic communications and Web sites to a Linux-based system. Because open source software is free, he said, the cost savings reaped by this change would be significant. His Chinese counterpart looked at him and said, with a straight face, "but in China, all software is free."

3. Piracy could be reduced in China if the government would just enforce some of its existing intellectual property laws.
"Until China creates an economically secular government, piracy will be the norm rather than the rule. Just like revaluing the renminbi, the Chinese government is not going to make a significant change unless there is a measurable benefit for China, and when it comes to stamping out piracy, at this point there just is not." Read more

China’s 3G attack, via Europe - ZTE, Huawei clinching important deals in Europe

From RedHerring: China’s 3G attack, via Europe

"With its major manufacturers clinching important—and long-term—deals in Europe, China is challenging the market’s foreign rulers (Motorola, Ericsson, Nokia). Chinese telecom equipment manufacturer ZTE announced a code division multiple access (CDMA) technology alliance with France’s Alcatel at the 3GSM conference in Cannes this week. It also outlined plans to launch third-generation (3G) mobile handsets on the continent as part of a planned push into the European market. Huawei, another Chinese vendor, clinched its first European contract for a 3G mobile network in December (10-year contract with Telfort, the smallest of the Netherlands’ five mobile carriers)."

“It used to be that Chinese manufacturers were used as a stick to beat down prices but technically were not competitive. Today, it is very different, technically they are competitive as well,” said Jason Chapman, a telecom equipment analyst in the London office of Gartner, a technology consultancy. “It would not surprise me at all if they started winning more contracts in Europe. ... U.S.-based Vodafone has said it is testing Huawei’s networking equipment in its labs, according to Gartner’s Mr. Chapman."

"The company (ZTE) said it has over 2,000 engineers engaged in research and development of the wideband CDMA 3G technology used in the European market. It has set up 14 offices in Europe and opened a research institute in Sweden." Read more

Report On China's B2B, B2C and C2C Giant Alibaba (Taobao)

From CHINAdaily: Open sesame to the Net highway

"Alibaba International was launched in 1999, and in this short span (through its website Alibaba.com) has already drawn 1.2 million registered users across some 200 countries; and 1.8 million businesses to its dedicated China site. And Forbes magazine's four-years-in-a-row "Best of the Web: B2B" honour is the feather in its crown."

"We don't have an online competitor (either) in China or in the world," Ma (Alibaba.com's founder, chairman and ceo) says. "Globally, our competitors are the traditional trade magazines such as Global Sources. They are very good. But in China there is nobody. We have 99 per cent of the users." The value of transactions through all its sites in 2004 was more than US$4 billion. ... An official fact sheet ... says US GAAP revenue for 2004 was US$46 million."

"The firm's phenomenal growth saw it expanding into three dedicated B2B portals, before turning its attention to the C2C market in 2003 with the launch of taobao, an online auction website. Taobao competes directly with US online auction giant eBay's dedicated China site, EachNet, for China's more than 90 million Internet users. ... So far, eBay is still ahead in China, but perhaps not for long. EachNet, with 10 million registered users, traded US$360 million worth of goods in 2003, compared to taobao's 4.3 million customers and US$300-million transaction for a US$46-million revenue. But the Shanghai-based EachNet controlled 60-70 per cent of China's online auction market when it was taken over completely by the US company in September 2004." Read more

Chinese OEMs Show Strong Growth

From ElectronicNews: Chinese OEMs Show Strong Growth

"Total electronics systems production in China rose to $209.5 billion last year, up 13 percent from $185.5 billion in 2003, while the nation's OEMs racked up 14 percent growth, according to the El Segundo, Calif.-based market research firm (iSuppli Corp.)."

"A listing of the top indigenous Chinese OEMs in 2004 showed that among the top 10 Chinese OEMs, telecommunications gear maker Huawei led the pack with a 71.8 percent increase in revenue from 2003 to 2004. Huawei competes directly with Cisco, Lucent and Alcatel and projected that 40 percent of its 2004 revenues were derived from sales outside of China.
TCL was the second-strongest performer among the top 10, with its sales rising 62.9 percent over 2003. TCL established with two joint ventures in 2004 – one with Thomson and the other with Alcatel – that are credited as allowing the company to emerge as the world’s largest TV OEM and as the seventh-largest handset OEM." Read more

Nasdaq-listed China Stocks' miserable start to the year - unrealistic investor expectations?

From TheStandard: Mainland tech firms falling fast on Nasdaq

"Shares in every mainland firm listed on the tech-laden market are down, some by more than half. Shanghai-based online recruiting firm 51job's shares fell 56 percent after it said fourth-quarter earnings would disappoint. Analysts, many of whom recommended the stocks, claim the problem, in most cases, is not poor management, but unrealistic investor expectations. How, they ask, can mainland Internet portals such as Sina or Sohu be expected to rake in the sort of profits seen at Yahoo and Google, two high-flying Nasdaq-listed firms operating in the United States, a country with high broadband and credit card penetration?"

"It's not that the model [for these companies] is bad, it's just that the market is not big enough yet,'' Anthony Lok, managing director at BOC International in Hong Kong, said. "Everyone sees 1.3 billion people buying things online, but it turns out that 800 million of them are sitting on the farm,'' he said." Read more

Huawei: China's First Producer of 3G Handsets - Huawei U626, U326, E600

From 3G.co.uk: China's First Producer of 3G Handsets

"Huawei Technologies Co., China's largest telecommunications vendor, today announced the global launch of commercially ready-for-market UMTS devices at the 3G World Congress & Exhibition in Hong Kong. With the launch of the three types of commercially marketable series terminal UMTS products, Huawei is the first producer of 3G handset in China." Read more/Pictures