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Nokia Siemens Networks, a mobile telecom joint venture between the Finnish and German multinationals, has high hopes of playing a leading role in building China’s third-generation wireless networks, but appears to be getting off to a slow start.

The 50-50 venture, which started formal operations this month, has said it aims to win a third of contracts to be awarded for network equipment based on the Beijing-backed TD-SCDMA 3G technology standard.

People familiar with the situation say TD-Tech, a joint venture between Siemens and Chinese telecom equipment-maker Huawei, is set to supply less than one-sixth of the wireless base station equipment recently tendered for by China Mobile, the country’s dominant wireless operator.

Meanwhile, Nokia and its local joint venture partner Potevio are poised to supply just a few per cent of the multi-billion-dollar orders China Mobile is placing for equipment to set up “trial” TD-SCDMA networks in eight cities around the country.

Nokia said yesterday it would decline to comment on ongoing tenders. However, the disappointing beginning to foreign involvement in TD-SCDMA network construction offers further evidence that the infrastructure bonanza promised by the introduction of 3G in the market with the most mobile subscribers in the world will prove to be much smaller than international vendors once hoped.

Years of delay by China’s telecoms regulator means the price of equipment based on the European- backed WCDMA and US-favoured CDMA2000 standards has already fallen substantially – and has given local providers, such as ZTE and Datang, a chance to polish their products.

There is also no question that Beijing sees the introduction of TD-SCDMA networks as a way of giving Chinese manufacturers an edge in a market long dominated by foreign vendors.

China’s notoriously opaque telecom regulators have yet to offer any formal indication of their 3G plans, but the huge scale of the TD-SCDMA trial – which covers cities hosting events for the 2008 Beijing Olympics – is clearly intended to give the technology an edge over rival standards.

Nokia, which is a major player in China’s market for “2G” GSM network equipment, was a relatively late entrant to the TD-SCDMA business, sealing a Rmb900m ($116m) joint venture with local counterpart China Putian only in October 2005.

Siemens, however, has been a strong and early backer of TD-SCDMA, and its stake in TD-Tech puts it in alliance with Huawei, China’s biggest telecoms equipment vendor.

While ZTE appears to be the early leader in TD-SCDMA – with a China Mobile official saying yesterday that it alone had won bidding for nearly half of the equipment contracts on offer – it is still too soon to count international vendors out of the market.

ZTE itself has said in the past that Chinese mobile operators often prefer to do business with foreign equipment suppliers.

Copyright The Financial Times Limited 2018. All rights reserved.

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