Ericsson's China Strategy
The tie between Ericsson and China may be traced back to more than one century ago when the first batch of Ericsson telephone sets - 2,000 in all - were shipped to Shanghai. Being a giant telecommunications company of world renown, Ericsson makes a point of localizing its widespread branches and merging itself with local economies. The localization of Ericsson (China), considering the great market in China, is a very important step towards the globalization of Ericsson. According to the 2000 plan of Ericsson, the company will order RMB 14.9 billion worth of components from local suppliers, which is by all means a substantial order. Even more to Chinese enterprises' happiness, Ericsson's determination to take root in China will enable them to land still more generous orders and have a larger share in the Sweden-based company's production and R & D activities. Together, Ericsson and China will embrace prosperity.
Ericsson's localization program has already born fruits - its domestic purchase value rocketed from RMB 3.9 billion in 1999 to this year's RMB 14.9 billion. Apart from the staggering 4-time increase, Ericsson has another generous gift to offer. By the end of 2000, the accumulative investment from the company will reach $ 600 million. As part of its localization program, Ericsson also took many of its first-level and second-level suppliers to China, who up till now have invested a total of RMB 15 billion. The telling figures suggest strongly that Ericsson is going full steam ahead with its localization project and is seeking a win-win ending with local enterprises.
The increase in "domestic purchase" resulted immediately in the improved "homemade rate" of Ericsson (China) products. For example, two of the company's mobile phone models - T18 and A1018 - now rely more than 60% of their components on...