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Monday, April 07, 2008

The Chinese ringtone

Move over Nortel, Motorola, Ericsson, Nokia-Siemens and Alcatel. It’s Huawei, ZTE from China storming into Indian telecom equipment market.

Their bargaining chip? No marks for guessing - a 10 to 20 per cent price advantage over European and American competitors and growing engineering capabilities. Huawei sold equipment worth $700 million last year and expects to more than double the revenues from India to $1.5 billion this year. The company has bagged a $500-million order for GSM mobile equipment from Reliance Communications (RCom), the country’s largest CDMA player that is shortly rolling out GSM services.

Hey, what about national security issues? Shut up. For now, it’s pricing power. Everything crumbles before economics, silly! That’s the Chinese trump card.

Here’s the famous line from competition - “[Chinese] have serious issues on servicing their network, plus as they increase their service support staff, their costs will go up. You can’t continue to dump prices and sell for long,” said a senior executive of one of the largest European telecom equipment-makers.
"So, what's the discount?" - No answer.

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