Chinese tide of innovation hits islands

Jersey, Guernsey and Isle of Man provide China's tech giants with opportunities

More and more Chinese technology firms are winning contracts to build network infrastructure in Europe, one prime example being the United Kingdom's Channel Islands, as a direct result of investment in technological evolution and innovation.

This is changing perceptions and expectations of China as it changes emphasis from a manufacturing-based economy to an emerging economy based on technological innovation and industrial evolution in products and services, industrial experts say.

Top: Sure rolls out the 4G network provided by Huawei. Above: ZTE engineers install the 4G network in Jersey. Photos Provided to China Daily

Huawei beat four other competitors to win a contract last year from Sure, a large offshore islands telecommunications company, to upgrade its LTE/4G network in Jersey, Guernsey and Isle of Man. The rollout and deployment of the network were completed in seven months without any difficulties, Sure says.

"We evaluated Huawei on the technology, the commercial proposition and the ability to 'future proof' our investment. From a shortlist of five global contenders we short-listed to three, and Huawei was the successful vendor," says Graham Hughes, Sure's Jersey chief executive.

Sure has a strong relationship with Huawei, a key supplier of both its mobile and fixed infrastructure.

Hughes thinks it is inevitable that Chinese companies will win more contracts elsewhere as the barriers and perceived problems of working with Chinese manufacturers and suppliers diminish.

He sees China as a real innovator in telecommunications and technology and says its "power and capacity to keep pushing the boundaries forward and also the quality of the product are clear differentiators for us in making our choice of vendor".

Sure has provided the telecommunications infrastructure for several local legal, trust and e-commerce businesses operating in Hong Kong and the Chinese mainland, including in Beijing and Shanghai.

In Jersey alone, Chinese partners are now providing two of the three mobile networks.

ZTE, another technology giant, has struck deals with Jersey Telecom to roll out a 4G LTE - a network and convert broadband services on the island to superfast fiber.

"The reason we chose ZTE is because we think they are technically capable of doing the project and also ZTE have shown us their willingness and commitment in wanting the business," says Graeme Millar, CEO of JT.

"Thanks to our choice of ZTE as partner, and our 12-million-pound ($18.6 million; 16.5 million euro) investment, we delivered superfast LTE across the islands, ahead of any other local operator, on time and on budget in less than six months from inception to delivery."

ZTE's contribution to the rollout cannot be understated, since it proved it could save the company money.

"Interestingly, there is a connection between the projects allowing us to make huge cost savings by using the same equipment for both the 4G and the fiber implementation programs," Millar says. "So building a network is not just to deliver 4G now, but to serve our islands for many years to come as new technologies emerge."

Previously, JT also worked with UTStarcom, another leading Chinese network provider and telecom operator, to implement a new core infrastructure for JT and its affiliated companies.

Millar says it would be unwise to still view China as a poor manufacturing center, and says the old negative perception of "made in China" is out of date, given that China is making giant leaps in technological innovation.

"The reasons Chinese technology companies target the network and infrastructure sectors in the European Union are of major strategic dimension," says Christopher Bovis, professor of business law at the Business School of the University of Hull. "The technology and network sectors represent the most coveted business opportunities for Chinese companies and investors alike."

The more that Chinese firms establish market share in those sectors, the more they gain specialization, credibility and build a competitive advantage, Bovis says.

Chris Rudd, professor of mechanical engineering at the University of Nottingham, says: "Huawei and ZTE have been able to refine their products in China at reasonable cost and use investments from the massive infrastructure rollout that the Chinese government has enabled over the past decade. They have developed products and infrastructure that can quickly provide payback because of the massive scale of the Chinese mobile market.

"They are also providing quite advanced technologies that support the more integrated way that Chinese people use their mobile devices in their daily lives compared to the West. Of course they also have, nowadays, a good reputation for both quality and delivery on time and on budget."

To stand out at the global technology front, Rudd thinks that Chinese companies should learn more about product design and customizing goods and services for different market niches.

"These are factors that play strongly in more segmented markets. They open the door to high-value-added products and services and will help Chinese companies present themselves as sophisticated suppliers as well as highly efficient, cost competitive implementers."

Rudd says he agrees with the notion that all eyes are looking to China now as a leader in technological evolution and innovation.

"As China moves toward its 2020 goal of 2.5 percent of GDP reinvested in R&D, we are seeing more and more signs that China's tech giants will emerge before that."

As China's overseas returnees and the enormous infrastructure investment of the 12th Five-Year Plan (2011-2015) kick in, the myth of China as home only to copy shops and low-tech, high-volume manufacturing will be completely destroyed, he says.

"But this is also important for sustainable growth. As lifestyles change and the expectations of citizens grow, then higher wages must be accompanied by value-added manufacturing," Rudd says.

wangmingjie@mail.chinadailyuk.com

(China Daily European Weekly 09/25/2015 page19)