Nokia expands in China with high hopes for CDMA

Nokia Corp. on Friday rolled out its plans for a mutipronged expansion program into the lucrative Chinese mobile phone market as the company seeks to keep up with its increasingly aggressive competitors.

The Espoo, Finland, company is establishing a technology-platforms unit in China, launching a Nokia Postdoctoral Program for the promotion of open standards and technology localization and is creating a Code Division Multiple Access (CDMA) research and development (R&D) facility in Beijing, it said in a statement.

“A lot of the network vendors and handset manufactures are keen to expand and promote their products and services in China in particular, and the Asian market in general, as it is such a potentially lucrative market,” said Paolo Pescatore, senior analyst for IDC in the U.K.

Data from China’s Ministry of Information Industry indicated that in 2003, China’s mobile phone market grew by 62 million to 269 million mobile phone users.

But Nokia has a bit of catch-up to do in China when it comes to competing against rivals such as Motorola Inc., Siemens AG and Alcatel SA, which have already been moving to capitalize on the growing market, Pescatore said. Motorola, for example, has repeatedly said it aims to go into the China market aggressively, and at the beginning of this year, announced it had signed contracts worth in excess of US$1 billion with telecommunications carriers in mainland China.

“I’m not saying that Nokia is coming too late to the Chinese market, but the company as a whole has been struggling to maintain its traction,” Pescatore said. “This is a sign that the company is beginning to refocus on the emerging markets as it has promised to do in the past.”

Nokia said its technology-platforms unit will be responsible for the licensing of Nokia Series 60 platform and Java technologies and will also collaborate with the Chinese developer community on mobile phone standards and the promotion of Symbian technology. The Nokia postdoctoral researchers will be encouraged to concentrate on areas such as Asian user interfaces, third generation (3G) and other radio technology, Internet Protocol version 6 (IPv6) protocols and Chinese mobile applications, the company said.

Additionally, its CDMA R&D center, which is expected to open in June, will focus on supporting the standard as well as training local developers on using CDMA. The new R&D center brings the number of R&D units Nokia operates in China, which employ more than 600 people, to five.

“China is mainly a player on Global System for Mobile Communications (GSM) networks,” Pescatore said, “so Nokia is really going to have to demonstrate to Chinese companies the benefits of using its CDMA technology.”

According to Ben Wood, principal analyst for Gartner Inc., the Chinese government has promoted a mixture of technology in an effort to keep its options open, but the CDMA standard is more fragmented in that market than other standards and also needs to be localized.

“CDMA is an important part of the market in China, and it is in Nokia’s best interest to try and counteract some of the success Motorola has had with GSM in China,” Wood said.

Samsung Electronics Co. Ltd. and LG Electronics Inc. have already had success in the CDMA market over Nokia, but the company has reported strong growth in the North American market with CDMA and it is logical for Nokia to seek to replicate that achievement in the even larger Chinese market, Wood said.

Nokia forecasted that 40 percent of its global Mobile Phones Business Group handsets will be designed and developed in its Beijing product creation center, which was established in 1999 and is where products like Nokia’s N2100 and N6108 handsets have already been developed.

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