Transcript Telecom equipment markets in China The big picture

www.idate.org
The European way to think the Digital World
Telecom Equipment
markets in China:
The Big Picture
Jean-Charles Doineau, Head of TDS division, IDATE
Julien Grivolas, consultant
Telecom network Equipment market in China: The big picture
www.idate.org
Fu Jun at Huawei technologies has said:
“ in the past few years China has seen telecoms
growth of seven times gross domestic product - not
bad when your GDP is growing at around 7%. But he
also predicted that the market will now be looking at
increases of around the same as GDP or 7% for the
next few years”.
August 8th 2003
IDATE © 2003
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Market fundamentals
Telecom network Equipment market in China: The big picture
www.idate.org
 Claim to Fame: The biggest potential development
perspectives in the market.
 3G licences (WCDMA, CDMA2000, TD-SCDMA) likely
to be granted to operators in beginning 2004..
Population 1.281 billion
GDP per
US$4,300
capita (PPP)
GDP growth 7.9%
Fixed-line
16.7%
penetration
Mobile
15.6%
penetration
 China Telecom IPO in Nov. 2002 only raises half the
expected amount.
 MII carefully regulates the market; open to foreign
vendors but essentially still closed to operators.
 China Mobile surpasses Vodafone as world’s largest
mobile operator
Broadband
0.44%
penetration
August 8th 2003
IDATE © 2003
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Telecom equipment markets in China
Telecom network Equipment market in China: The big picture
www.idate.org
• Market structure is
based on 4 network
operators (2 in the fix
market, 2 in the
mobile)
2002 figures
China
China
2000China Mobile
2003 (e)
China
2007 (f)
Unicom
Turnover
North
(CNY America
millions)
75 496
67 600
128 561
323.7
50 800
CAPEX
(CNY millions)
Western
Europe
28 919
Telecom services markets,
BUSD Netcom
Telecom
Employees
• Growth of the market
in value is one of the
highest in the world,
though ARPU is still
very low
Asia-Pacific
Agreed restructured
coverage
China
Fixed lines
(in millions)
Rest of the world
Mobile subscribers
(in millions)
Total
na
na
210 000
21
provinces
10
provinces
57
77.4
-
-
328.5
41 000
205.3
59 633
na
261.2
61.5
137.2
200.3
131
(end July
2003)
922.9
1 138.2
Source:IDATE
310.4
na
256.6
348.2
Nationwide
37.1
-
368.1
445.5
Nationwide
-
89.3
275.4
71.4
(end July
2003)
1 399.5
Source:IDATE
August 8th 2003
IDATE © 2003
4
Telecom equipment markets in China
The big picture
www.idate.org
• IDATE
anticipates
this
situation to persist for the
next 4 years.
• Chinese market is
one of the more
strategic worldwide
market, as well as in
APAC.
In millions of USD
2003*
70%
2007*
Australia
North America
24%
27%
USA
21%
24%
Hong Kong
Taiwa n
Fixed- line Teledensity
• In 2003, for the first year ever,
Chinese Network equipment
market has become the first
international
market
in
volumes (all combined).
N ew Zea la nd Ja pa n
S.41%
Korea Singa pore 40%
50%
Asia-Pacific
China
26%
29%
Western Europe
22%
22%
Source:IDATE M a laysia
China
10%
0%
Tha ila nd
Vietna m Indonesia
La os Ca mbodia
M ya nma r
Monopoly
Philippines
Controlled Competition
Free Market
Competitive Ma rket Dyna mics
August 8th 2003
IDATE © 2003
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Telecom equipment markets in China
The big picture: Who does what?
www.idate.org
•
Narrowband switching: 212 million lines, second market worldwide
The access equipment market for fixed networks is dominated by Alcatel and Siemens
in China. Siemens has a manufacturing plant (BISC) for its EWSD circuit switches in
Peking. Ericsson is also present in this market with its ENGINE fixed/mobile solution.
•
Broadband switching: 58 million internet users, 3rd market worldwide
China's DSL infrastructure market leader is the joint venture Alcatel Shanghai Bell
which holds 50% of China's DSL access market. In 2002, Alcatel Shanghai Bell
announced that they had delivered 1 million DSL lines in China. Nokia, ZTE
Corporation and UT starcom are also present;
August 8th 2003
IDATE © 2003
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Telecom equipment markets in China
The big picture: Who does what?
www.idate.org
•
Mobile handset market: 49 million unit market 2003, first market worldwide
A lot of regional manufacturers have invested the place.Market is dominated by
Motorola and Nokia, followed by Ninbo Bird, TCL Group, Siemens, and SonyEricsson.
Margins of western manufacturers are going to decline, and development of a
consolidation mechanism will appear in the Chinese market.
•
Mobile infrastructure market: 58 million internet users, 1st market worldwide
Market is dominated by Ericsson, followed by Nokia and Motorola. Other major
providers are Siemens, Nortel Networks, Alcatel, and to a lesser extent, Huawei
Technologies and ZTE Corporation. 3G roll out is a very important challenge for
these technology providers.
August 8th 2003
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Strong investment in Local R&D
Telecom network Equipment market in China: The big picture
www.idate.org
•
China’s public R&D investment as been continuously growing from the 80’s
•
This huge R&D public investment has let emerge a 10000 staf in R&D ( ~ 40 %,
over 22000 people), through common public and private R&D labs. This Would
mean 36 K$/year cost module.
August 8th 2003
IDATE © 2003
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Development of local players
Telecom network Equipment market in China: The big picture
www.idate.org
•
•
•
•
Huawei
Technologies:
a
comprehensive product portfolio
combined with technical leadership
Huawei’s yearly revenues equals a
quarter of the occidental NEPs
Internationalization of the strategy:
2 European country (BerliKomm),
Russia, Mexico, Brazil, Colombia,
Ecuador, Chile and Peru, Australia,
India, Malaysia, the Philippines and
Indonesia
Main competitive advantage: price
(20 to 40% markup compared to
occidental NEPs)
HUAWEI
Fi xe d Network
Sol utio n
Mobi le Netwo rk
Sol utio n
Data
Comm unicati ons
Sol utio n
Switchin g
GSM 900 /180 0
ATM
Opti cal Acces s
Network
Sho rt Mess age
Center
Acce ss Se rve r
SDH/DWDM
Tra nsmi ssio n
Mobi le Intel lige nt
Network
Router (26 00, 3600 ,
45 00, 7500 , GSR)
STP, BITS
Bas e Sta tion
Moni tor
LAN Swi tch
In tell igen t Network
Mobi le Cal l Center
Call Cente r
GPRS
ETS 450/1900 WLL
CDMA
ASIC De sign Cente r
August 8th 2003
IDATE © 2003
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