Ericsson's Marketing Strategy In China Essay

1659 words - 7 pages

Ericsson's China StrategyThe 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 domestic suppliers; all Ericsson chargers and batteries are made in China; many mobile phone accessories to Ericsson phones are being exported; and the transfer of lithium polymer battery technology is under way. Some day in the future, Chinese consumers might no long take pride in their "purely imported" mobile phones, rather they would be proud of their homemade Ericssons. In addition to mobile communication terminals, Ericsson's joint ventures in China are also engaged in the manufacturing of mobile communication ground stations. From January 1999 on, Ericsson Nanjing Communications Co. Ltd. (ENC) and Ericsson Beijing Mobile Communications Co. Ltd. (BMC) have been turning out and testing all Ericsson's ground station models but low-capacity and low-end ones. After one year's effort, the daily output of each of the two companies has rose from 10 sets in January 1998 to 45 in December 1999. At present, Ericsson is engaged in the localization of its most state-of-the-art telephone exchange - HWM 501 and the foundation of relevant testing centers. Switchboards of even higher capacity will be produced in China this year...

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