Major Japanese vendors have made abundant preparations for the foreseeable severe competition in the CDMA market, which has attracted keen interest from both customers and vendors.

Hitachi, Toshiba, Kyocera and Sanyo, major mobile phone makers in Japan, all claim that they will not let this opportunity go without grabbing more market shares in the CDMA, to compensate for their mediocre performance in the GSM (global system for mobile communications) age.

CDMA and GSM are two technology standards for mobile communications. As China Mobile and China Unicom, the country's only two mobile carriers, both adopt GSM technology, European companies, pioneers in these standard, control dominant shares in the Chinese mobile handset market at present.

Finnish Nokia, Swedish Ericsson, German Siemens and French Alcatel, plus Motorola of the United States, occupy over 75 per cent of China's mobile phone market. Those from Japan such as Sony and Panasonic, do not have the capabilities to rival these European brands, as Japan uses CDMA technology instead of GSM. The Japanese want to make the CDMA age their epoch, and opportunities may now come their way, with China Unicom's pending CDMA network.

Hitachi, the famous home appliance maker, was one of the first to announce among Japanese players, that it is to set up a joint venture, a CDMA mobile phone production base together with Chinese partner, Qingdao-based colour TV maker, Hisense.

"We cannot afford to miss the market," said a spokesman from Hitachi.

Toshiba, another home appliance vendor, revealed that it would start to produce CDMA handsets early next year in cooperation with Nanjing PTIC, a Chinese telecom equipment vendor.

"Japanese companies have much experience in making CDMA phones based on the years of manufacturing in our home market," said Ken Shinjo, spokesman of Toshiba.

Kyocera, a relatively new name for most Chinese people, but well-known for mobile telecom insiders, also announced in Beijing that it will set up a joint venture in Southwest China's Guizhou Province with a local firm named Zhenhua.

Sanyo, which has a factory in Tianjin, said it would follow suit. Sony and Panasonic, which entered China's mobile handset market years ago with GSM phones, are expected to follow in the steps of their Japanese counterparts, although the two have not yet announced any specific plans.

China Unicom's CDMA network, which is said to cover 300 cities and support 15 million subscribers, will add more power to the competitive mobile telecom market, as competition between China Unicom and the dominant China Mobile is already quite severe.

CDMA has not only advantages in the cheap service charge (0.20 yuan per minute, which is half of the GSM), but also lower radiation than GSM and better quality voice communications. The major advantage for the Japanese vendors is few Chinese companies can produce CDMA handsets.

The industry watchdog, the Ministry of Information Industry, recently issued 19 licences to 18 domestic companies and Motorola (China) for producing CDMA handsets.

Some of the licensees, like Zhenhua, Daxian and Soutec, do not have the ability to independently produce CDMA handsets. They received production licences from the government and hoped to attract foreign companies to set up JVs with them, as the government is not likely to issue more licences to foreign vendors.

On the other hand, if foreign brands want to enter the Chinese market, setting up JVs would be a good idea, as it would cut costs and become localized.

In comparison with the active preparation of the Japanese vendors, domestic licensees moved slowly, while only ZTE (Zhongxing), a Shenzhen-based telecom equipment manufacturer, said it has the ability to produce the whole set of CDMA equipment, from base station to mobile handsets.

(China Daily 10/08/2001)