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Mitsubishi to Withdraw China's Telecom Market
[March 02, 2006]

Mitsubishi to Withdraw China's Telecom Market

(Comtex Business Via Thomson Dialog NewsEdge)BEIJING, Mar 02, 2006 (SinoCast China IT Watch via COMTEX) --Mitsubishi Soyea Mobile Communication Equipment Co., Ltd. held a meeting on February 24 and announced the Japanese party would remove the investment and the company would dismiss its branches in Beijing, Shanghai, and Guangzhou.

It was rumored last year that Mitsubishi Electric would withdraw from the Chinese market entirely, but the rumors had real influence on its staff since the company started to clear its storage massively early this year.

According to the announcement, all the staff of the venture except those at the Hangzhou production base would be dismissed since the meeting closed. The after services of the Mitsubishi mobile phones on the market would be taken up by its dealer.

It is another Japanese communication company withdrawing from the Chinese communication market after Toshiba and Matsushita.

Mitsubishi Soyea Mobile Communication Equipment was a joint venture between Mitsubishi Electric and Soyea Technology that was controlled by the Japanese company. As a major business of Mitsubishi Electric, the joint venture was mainly engaged in the research, development, production, sales and after services of Mitsubishi Electric's mobile phones in the Chinese market.

Mitsubishi had no advantages of communication systems or terminals, so it was a correct choice to withdraw when there was no profit, said Shu Huaying, a professor at Beijing University of Posts and Telecommunications.

However, the staff with Mitsubishi believed that Mitsubishi's failure was not the only sample, but among the Japanese communication companies. It could be attributed to the Japanese government's 2G industry policy as well as little investment in the research and development in China, and simple design.

Japan adopted the national communication standard PDC in the 2G epoch, which formed a close technology environment in the Japanese market and made the Japanese mobile phone manufacturers incompatible to the international standard.

Meanwhile, it was accustomed to the customization mode with the Japanese telecom carriers and lacked of the necessary marketing means in the retailing market.

Mitsubishi's withdrawal should not be limited in the failure of Japanese communication companies and the shrinkage of Japanese mobile phone manufacturers. The Chinese mobile phone market could refer to it for its launch of 3G.

The Japanese government forced the domestic 2G industry to adopt its proprietary PDC technology that was incompatible with the international GSM and CDMA standards in 1980s. Although the Japanese communication equipment providers made an excellent performance in the domestic market in the past twenty years, the isolated market condition made it difficult for the Japanese telecom companies to expand the overseas market, pointed out an industry expert.

The reason for the Japanese government to promote PDC lied in that Japan's largest telecom carrier NTT was a company directly controlled by the Japanese government. It was leading in terms of the R&D ability. NTT participated in the development of PDC standard and became the major company pushing Japan's 2G industry.

Japan strongly promoted its PDC standard once, but its efforts turned in vain. Now about 70 percent of the global 2G users adopt the GSM network. Therefore, most people believed that there were more disadvantages than advantages in adopting its national standard.

The present situation of China's 3G standard has the similar background with the 2G epoch of Japan. Their local markets were generally taken by foreign telecom providers in the mobile telecom market of the previous generation, and the government wanted their own companies could take hold of the mobile telecom market of the following generation. Besides, the state-owned companies helped with the establishment of the national standards.

Frankly speaking, China's TD-SCDMA standard will not be applied into the overseas market massively. It is decisive which carrier will acquire the TD-SCDMA license, said the industry expert. The TD-SCDMA will be rejected by the overseas market like Japan's PDC technology unless China's No.1 mobile telecom carrier China Mobile will operate the TD-SCDMA network. But it is rumored that China Telecom will operate the network.

(USD 1 = CNY 8.042)

From 21st Century Economic Herald, Page 1, Wednesday, March 01, 2006
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