Ericsson, the world's biggest maker of mobile networks equipment, expects its China sales growth to exceed 10 percent per year in 2007 and 2008 amid robust demand in the world's fastest-growing major economy.
China is the company's single largest market, accounting for 7 percent of its global sales in the first nine months of 2007, Ericsson's Greater China President Mats Olsson said.
We see significant demand in China as subscriber growth is at an all-time high. The demand is definitely there, he told Reuters in an interview on the sidelines of the Mobile Asia Congress in the Chinese gambling enclave of Macau.
The Stockholm-based firm forecasts its market share in China's mobile network equipment sales to stay at 35-plus percent in 2008 and its profit margin in the market this year and next to be equal to or better than in 2006, Olsson said.
He declined to disclose the company's China profit margin in 2006.
The telecoms equipment group dismayed investors last month with unexpectedly weak profits, sending its shares at one point down 30 percent, the biggest intraday fall in its history.
Ericsson blamed its woes on lower sales of network upgrades and is now counting on emerging nations that race to build new networks. But new networks involve greater costs, so are less lucrative than network upgrades.
China's second generation mobile network is growing at a fast rate, but Ericsson said it was important for China to develop its third-generation wireless standard network.
It is important for a leading market like China not to lag behind in terms of 3G adoption, Olsson said.
China has no timetable for awarding licences for 3G mobile phone services and has no other options if its homegrown technology is not ready in time for the 2008 Beijing Olympics, a senior regulatory official said last month.
Ericsson and other network makers have been eagerly awaiting a decision from China on awarding 3G licences but Olsson said any delay would not have a major impact on the company.
There is so much left to do in 2G in China, he said.
Data usage of 2G was rising and its value-added service still had fantastic growth, he said, adding it was an area to explore.