BEIJING, Dec. 4 -- Swedish telecom giant Ericsson expects to be the top vendor in China's future 3G (third generation) mobile telecom equipment market, an executive said.

    "We aim to continuously consolidate and grow our leadership in China by strengthening our local organization and elevating local competence," said Mats H Olsson, president of Ericsson Greater China.

    "We will continue to reinforce Ericsson's capacity in local research and development (R&D), manufacturing and services in China over the coming years, which will lay a good foundation for our future growth in the country."

    Currently Ericsson is the largest vendor of the 2G (second-generation) mobile telecom gear market in China. The firm is the largest supplier of GSM/GPRS network equipment to China Mobile, with over 35 percent market share. And it accounts for about 15 percent of China Unicom's GSM network.

    Strengthening local efforts

    In the past few years, Ericsson has aggressively revamped its localization efforts. China is now one of the three major global supply hubs and in May the firm established a center for sourcing, supply and telecom services in Southwest China's Chongqing Municipality as part of its efforts to strengthen its local supply capability.

    Its R&D activities have grown at an annual rate of 30 percent for the past 5 years with 25 percent of its employees in China engaged in R&D and product development.

    Last year, Ericsson announced it would invest an additional 1 billion U.S. dollars in China, which is giving a major boost to expansion of the firm's manufacturing, R&D and service capabilities in the country.

    "We are well positioned to support Chinese operators in the 3G era," said Olsson.

    So far the Chinese Government has yet to decide when and how to award operators with the licences to build 3G networks. But Olsson believed that the WCDMA standard would dominate the 3G market. WCDMA competes with CDMA 2000 and TD-SCDMA, a Chinese home-grown 3G standard.

    As GSM and WCDMA share the core networks, operators running GSM networks usually choose WCDMA standard and upgrade their GSM networks to WCDMA networks.

    "The worldwide prominence of WCDMA and its well-trodden upgrade path from GSM will give that standard the heaviest weight in China's 3G market," said Beijing-based Norson Telecom Consulting in a recent report.

    "Therefore, even though its initial 3G revenue is likely to be slow because of the anticipated license release schedule, Ericsson will eventually be able to capitalize on its strengths to improve revenue and increase its share of the Chinese mobile telecommunications market."

    Ericsson is the world's largest vendor of WCDMA equipment, with a 35 percent share. Ericsson was the prime supplier to 60 of the 109 commercially launched WCDMA networks worldwide by the end of September 2006.