Chinese language - Nortel to boost investment

BIZCHINA / Overseas Investment

Nortel to boost investment

By Wei Tao (China Daily)
Updated: 2006-11-07 08:55

Canadian communications firm Nortel Networks Corp will boost spending to
tap into China's telecom market, despite ongoing restructuring of its
struggling global operations.

President and Chief Executive Officer Mike Zafirovski said Nortel would
move some jobs from developed markets to "low-cost markets" such as China.

"China is becoming increasingly important for Nortel  not only for sales,
but also for employment, research and development (R&D)," he said, adding
that the firm has no specific plans for a significant shift in employment
as yet.

The remarks come at a time when Nortel is to cut about 3 per cent of its
global workforce and sell its 3G (third generation) mobile communications
business to Alcatel.

Nortel has been creating jobs in China, especially in R&D, over the past
year.

The firm opened new facilities in Beijing on Wednesday including an
administrative office, R&D lab and a customer experience centre.

Nortel made the decision to build the facilities in 2003 and committed
US$200 million over three years to strengthen its R&D capabilities in
China.

The customer experience centre, known as the Executive Briefing Centre,
is the first of its kind in Asia for Nortel.

Increasing competition and accounting irregularities have caused problems
for Nortel  once a top telecom equipment maker.

Zafirovski, who joined Nortel a year ago, said Nortel is on the road to
recovery. In September the firm signed a preliminary agreement to sell
its 3G business to Alcatel.

That is part of Zafirovski's focus on more competitive businesses. In 3G,
"we found we cannot compete effectively in a global base," he said.

Selling off its 3G business may mean Nortel will lose the opportunity for
a share of the lucrative 3G market in China. The industry is expecting
the Chinese Government to award operators licences to build 3G networks
next year, which could be a windfall for gear vendors.

But focusing on the enterprise market and the emerging WiMax sector,
which are not overcrowded compared to 3G, should create a niche  for
Nortel.

"We've seen moderate growth (in terms of sales) in the enterprise market
(globally)," Zafirovski said, adding that he expects to see bigger growth
in the Chinese market.

Nortel recently formed an alliance with Microsoft to tap into the
enterprise market. In the latest fiscal quarter, the Asia market
contributed about 14 per cent to Nortel's global revenue, with China
"playing a big part."

(For more biz stories, please visit Industry Updates)

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