Telecoms equipment maker Ericsson is aiming to improve margins in China this year and expects to take GSM mobile networks market share from foreign rivals in the Asian nation, the company's China chief said on Friday.
"China is neutral for the group in regard to margins. There is of course fierce price pressure in China, but there are also huge benefits of scale," Mats Olsson, head of operations for Ericsson's biggest market, told Reuters in an interview.
"Our ambition is to marginally improve the margin this year from the previous year," he said. Ericsson's overall group operating margin in 2006 contracted to 20 percent from 21.8 percent in 2005. China accounted for 8 percent of group net sales of a total 89.8 billion Swedish crowns ($13 billion) in the second quarter.
"Subscriber and traffic growth for our main business in China - to sell GSM systems - is higher than ever," Olsson said. "In the first seven months of this year, China has added an average 6.7 million subscribers per month." Ericsson shares were trading 2.81 percent higher at $37.35 on Nasdaq as of 1748 GMT after closing 1.59 percent higher at 25.60 crowns in Stockholm.
The company will also increase its market share in China at the expense of its foreign rivals, including Nokia Siemens Networks and Alcatel-Lucent, the 52-year-old executive predicted. "We expect to have a market share this year that is at the same level or marginally higher than the previous year for GSM," Olsson said. "We are the only foreign supplier that will keep or marginally increase its market share."
Olsson cited the company's latest public disclosure on market share, which said Ericsson had 35 percent of the GSM market in the nation of 1.3 billion people. Products and services for GSM account for more than 80 percent of Ericsson's business in China, Olsson said.
GSM is the dominant second-generation mobile phone standard for most of the world. The other is CDMA. Ericsson also competes for GSM contracts in China with fast-growing home-grown telecoms gearmakers Huawei Technologies [HWT.UL] and ZTE Corp The Stockholm-based company is equally keen to break into the 3G market in China, although the timing is uncertain.
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