Monthly Archives: April 2011


While it sounds a bit like “rock-paper-scissors” the slogan is actually at the heart of Huawei’s strategy for the next decade. With this 3-pronged approach it aims to serve both telecommunication service providers, enterprises and end-users.

While building on the convergence of ICT, China’s leading telecommunication equipment manufacturer (and world’s second behind Ericsson) will be stepping out of its comfort zone with this attempt to provide a converged portfolio to its customers – its core competence lies in telecommunicaation equipment. But given its high commitment to R&D such a strategy may well pay off in the medium term.

Meanwhile potential a co-operative agreement or an alliance with its domestic rival ZTE may be delayed as both companies are suing eaching other on grounds of IPR infringement, that is unless some higher authority steps in and brings back harmony among the two companies.

Slowing down trains

The Chinese railway sector seems to capture quite a lot of attention these days.

After announcing the potential scaling down of high-speed lines construction, it is now the turn of the slowing down of high-speed train. The cause? Safety concerns related to the velocity at which high-speed trains run – for memory Chinese engineers made no secret of having improved the original technology acquited from foreign train equipment vendors.

While this may come to a blow to Chinese engineering feat and to potential sales abroad, it is good news for the environment as high-speed train not only cost more in terms of energy consumption (proportionally) but also incur additional maintenance and repair costs. Last, but not least, a lower premium on speed may even make those high-speed lines more affordable to consumers and turn out to be more profitable in the end.

Patent war?

Back in 2006 when Premier Wei unveiled the contour of the drive towards indigenous innovation – with the aim to turn China into  a technology powerhouse by 2020 and a global leader by 2050 – some observers warned that it could lead to a massive theft of technology. To the least it signalled that China had switched from defense to offense when it comes to industrial policy.

While the jury is still out as to technological theft one can not fail to notice the flurry of court battles piting against each other the up-and-coming Chinese telecommunications national champions (Huawei and ZTE) and the “defenders”.

In the latter camp Motorola just settled a case brought by Huawei on ground that the US firm was improperly using its technology. Ericsson got a similar treatment from ZTE with a patent-infringment lawsuit, somewhat of a tit-for-tat as the Stockholm-based firm is suing ZTE’s subsidiaries in Britain, Germany and Italy on ground of … patent-infringment – the feud will probably put an end to the strategic alliance that both companies formed back in 2005.

One thing is sure, when it comes to technological leadership Chinese companies are no longer shy in taking matters to court.

An industrial policy for electric vehicles

Electric car manufacturers beware! China is putting aside USD 16 billion to develop and commercialize electric cars for the next 10 years. The expected output? 2.5 million all-electric cars and another 2.5 million hybrids – in 2010 14 million cars were sold in Europe and 18 million in China.

In good old fashion the massive effort to build an indigenous electric car industry will be led by the Ministry of Industry and Information Technology and include both “hardware” (i.e., support to manufacturing, roll-out of basic infrastructure and pilot experiments) and “software” (i.e., financial stimulus including tax breaks and subsidies).

So far China’s electric cars are nowhere to be seen. But, with the help of industrial policy, the country may well put itself in the position to kick-start a promising industry, provided someone solves the issue of electricity production…

High-speed raillery

Plans to cover the country with HSL routes seem to have come under scrutiny since the ousting of the head of China’s Ministry of Railways (Liu Zhijun) on corruption charges.

For sure speed is expensive – building high-speed lines (HSL) can be 3x as expensive as conventional lines – and high-speed trains can only compete with airlines until a certain route length (max. 750 km). HSL also raise the question of social justice since they are paid for by the State budget but only serve the interests of a limited portion of the population.

So far more tracks for HSL was laid in China in the past 10 year that all tracks installed in the West for 50 years. Close to 9000 km (10% of the total network) are already in service and 17’000 km are under construction. Given China’s current drive to establish its technological prowess one can wonder whether social and financial concerns will prevail.