Motorola heads China tech orders ( 2004-01-13 14:13) (Agencies)
Motorola Inc. and Lucent Technologies Inc. will lead U.S. and other companies
on Tuesday in signing more than US$2 billion of sales to China's top telecoms
and computer firms, sources close to the deals said.
Motorola's wireless equipment unit will announce deals worth more than US$1
billion with cellphone carriers China Unicom Ltd. and China Mobile (Hong Kong)
Ltd., said one source who asked not to be named.
The deals, which will be fulfilled over an extended period, will be announced
in Washington and come as China falls under growing pressure to ease its trade
imbalance with the United States.
They follow announcements in November of big Chinese orders for U.S. goods
ranging from airplanes and automobiles to soybeans.
"There is definitely an element of political theater in this, but it
correctly sends a strong message about the importance of bilateral relations and
bilateral trade," said Patrick Horgan, managing director of consultants APCO
Worldwide in Beijing.
Lucent will receive about US$350 million in contracts, while Cisco Systems
Inc. will get about $140 million from Unicom and China Telecom Corp., China's
biggest fixed-line carrier, according to other sources who spoke on condition of
anonymity.
UTStarcom, which specializes in telecoms equipment for a low-end wireless
service offered by China Telecom, will announce a contract worth US$200 million
over 12 months, according to another source.
Fast-growing China has been a relative bright spot for global telecoms
equipment makers, which have endured lean years since spending on network
infrastructure plunged after the bursting of the technology bubble in 2000.
INTEL, NORTEL
Intel Corp., the world's biggest semiconductor maker, will announce
memorandums of understanding to supply chips to China's top two PC makers,
Legend Group Ltd. and Shanghai Founder Yanzhong Technology.
Canada's Nortel Networks and Sweden's Ericsson are the only non-U.S.
companies expected to announce deals at the event. Both will sign agreements
with China Unicom, with Nortel's contract worth around US$150 million.
An Ericsson executive, who spoke on condition his name not be used, said the
purchases would be spread out over time.
"The deal won't dramatically change Ericsson China's yearly outlook," he
said. "This is a Chinese IT purchase delegation, so they will sign some deals in
the U.S. to show that there are big volume imports from the U.S."
Officials from Motorola, UTStarcom and Intel declined to comment, other than
to confirm they will participate in the lunch-time contract signing ceremony in
Washington.
The signing of so many contracts at one time is partly political, Horgan
said.
The United States says its trade deficit with China reached more than $100
billion in 2002, and was expected to rise more than 20 per cent this year. Last
week, China said its trade surplus for 2003 reached US$25.5 billion.
To ease the imbalance, Washington has pressured China over the last year to
import more U.S. goods and let the value of its currency appreciate. The yuan
currency is pegged to the dollar.
"As China prioritizes its trade relations with the U.S., this is clearly an
area where continued strong trade relations between two majors players makes
sense," Horgan said.
China signed a deal to buy 30 Boeing Co airliners and engines from General
Electric Co. for $1.7 billion in November, part of a buying spree that
Washington hailed as a "big victory" for the companies.
Motorola shares rose 3.12 per cent on Monday after news of the telecoms deals
first appeared, while Lucent shares jumped 4.31 per cent, UTStarcom shares
closed up 4.01 per cent and Cisco shares gained 2.08 per cent.
The buying trip comes just one month after President Bush warned Taiwan,
China's island rival, against changing the status quo with the mainland,
delighting visiting Chinese Premier Wen Jiabao.
Legal experts and executives had said it was a good time for U.S. firms,
which have complained of slow liberalization in the telecoms sector, to seek
some sort of quid pro quo.
