According to unofficial reports the award of 3G licences in China now looks set to take place in the second quarter of 2004. Meanwhile the leading vendors are positioning themselves to cash in on this potentially hugely lucrative market. However the vendors’ task is not easy as the Ministry of Information and Industry (MII) has yet to make a decision on which of the three candidate 3G technologies – W-CDMA, CDMA2000 or the domestic standard TD-SCDMA - it will be giving its backing to.

The main proponent of TD-SCDMA, Siemens, has just announced plans to invest ?60 million per annum in developing and promoting the new technology. The German vendor and its local partner Datang Technology have already invested ?150 million in developing TD-SCDMA. The Chinese authorities are thought to favour the home grown standard because it has a low cost-base and early indications are that it performs well in dense urban areas but less well outside these.

The US vendor Motorola, which dominates the Chinese handset market, has established itself as the leading supplier of CDMA equipment and is therefore thought to favour the CDMA2000 standard for 3G services. Motorola has already supplied China’s number two mobile operator, China Unicom, with equipment and handsets for its CDMA2000 1xRTT network. However with continuing uncertainty over whether one, two or all three 3G technologies will be backed by the MII, Motorola like other vendors is not nailing its colours to a single mast but is participating in forums working on each of the technologies.

Leading GSM vendor Nokia is also hedging its bets somewhat and has made increasing its CDMA production in China a top priority in 2003. Meanwhile Sweden’s Ericsson has just announced a US$600 million contract with China Mobile subsidiary Guangdong Mobile to upgrade its GSM network.

According to a recent survey carried out by Motorola 24% of mobile subscribers in China’s major cities would be willing to sign up to mobile data services within the next six months. The Chinese market is now home to more than 200 million mobile subscribers. The MII forecasts that the Chinese market will have swelled to around 290 million by 2005, taking cellular penetration to between 20% and 25%.

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