Siemens To Invest 1 Billion Euros; Double Mobile
Phone Production
Siemens plans to invest 1 billion euros in China, and
expand its partnership agreement with Ningbo Bird, one
of the leading makers of mobile phones in China, over
the next five years. The move by Siemens reaffirms China
as the single largest and most competitive market for
mobile phone makers.
The goal of the Siemens group is to double sales within
five years, and its share of the Chinese mobile phone
market in three years. Siemens currently has 4-5% of the
market. The company currently has more than 30,000 employees
in China.
The goal is to lift expected sales from 4 billion euros
this year to 8 billion euros by 2009 at the latest. At
that point, China would contribute 10% of the company's
global revenues, up from the current 5%.
Heinrich von Peirer, Siemens chief executive, said that
he expected the Chinese economy to be able to make a soft
landing in the near future. Observers have questioned
whether the Chinese government will be able to make the
economy cool off in a measured matter, or whether it has
spun out of control.
The Siemens group has been involved in many large infrastructure
projects in China including power generation, medical
equipment, auto making, transport equipment, mobile phones
and information technology. In the past five years, China
has made for a larger chunk of Siemens revenue.
The single most significant project for the company has
been the magnetic levitation train which runs from downtown
Shanghai to the Pudong airport. Siemens was the lead contractor
on this this high-profile project, which was completed
in a record 1 1/2 years. For Siemens, the hope was that
this would lead to its selection in other major transport
projects.
With more than 300 million mobile phone users, China
has leaped ahead of the US as the single largest market.
All major handset makers including Nokia, Motorola,
and Alcatel
all have a presence there. Now, local makers such as Ningbo
Bird, which partners with Siemens, have made handsets
which are popular with the Chinese younger set.
Five years ago, Nokia was the leader, but its market
share has fallen, mainly because of its reluctance to
adopt the clamshell design for mobile phones. Clamshell
designs are most popular with young Asian users. Motorola
has shown signs of gaining popularity in China.
Siemens has a plant in Shanghai producing 14 million
handsets annually, and plans to raise it to 20 million
handsets over the next year. It plans to sell the phones
through Ningbo Bird's retail outlets, which number more
than 30,000.
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