BEIJING: Motorola Inc is to invest US$6.6bil in China over the next five years and double its production in one of the world's few remaining high-growth telecommunications markets. "It's an important market. We just have enormous opportunities in broadband, in wireless and in the Internet, not to mention in the sweet spot in which they all merge,'' Motorola spokeswoman Shelagh Lester-Smith said.
Analysts said the tripling of its annual investments in China would help Motorola cut costs as a global slump in telecommunications gear sales this year threatens to drag it into its first full-year operating loss in at least 45 years.
Motorola has said it plans to cut 7,000 more jobs elsewhere to take layoffs this year to 32,000, or 26% of its workforce.
Increasing production in China also made sense because sales were expected to hold up in a country where relatively few people owned mobile phones compared with the US and Europe, analysts said.
"If you combine the fact that it's a low-cost production base and also a pretty substantial domestic market as well, then obviously China's a pretty attractive place to be putting your investment in,'' said Ted Dean, managing director of telecoms consultancy BDA China Ltd.
Motorola's investment in China - now a cumulative US$3.4bil since it first invested in the country in 1992 - would reach US$10bil by 2006, said Lester-Smith.
That would mean investing US$6.6bil over five years at an average annual rate of about US$1.32bil, up from about US$377mil previously.
Lester-Smith, in Beijing for a company board meeting, said Motorola would double the annual production at its China units to US$10bil by 2006. Annual output included revenues of domestic exports and joint-venture output, which would be about US$5bil this year, she added.
Motorola is the second major foreign telecoms giant to announce a big boost to its China operations in just a few weeks.
French telecoms giant Alcatel SA said last month that it would buy control of its joint-venture telecommunications gear maker Shanghai Bell for US$320mil and merge the company with its other China subsidiaries and joint ventures to centralise its operations. - Reuters
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