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Motorola China Outlines 5-Year Plan

On the heels of a published report that a Communist Party branch exists within its operations in China, Motorola on Thursday unveiled what it termed a "2+3+3 strategy" for its Chinese operations, a plan that includes focusing on semiconductors, broadband and digital trunking systems.

Motorola, which has corporate headquarters in Illinois, first denied a report in The Economist, a U.K. news magazine, that pointed to a Communist Party branch within Motorola China. Then, it issued a statement outlining plans for the potentially lucrative Chinese market.

According to Motorola China CEO Tim Chen, the '2+3+3' strategy included building China into a worldwide manufacturing and R&D base for the telecommunications equipment giant. It includes three new growth areas including semiconductors, broadband and digital trunking systems and three $10-billion goals through 2006.

The announcements also follow Wednesday's news that Motorola would reorganize its Internet technology arm into three strategic parts to focus on individual markets.

Motorola China said it was aiming for annual production value to reach $10 billion by 2006, accumulated inputs in China to reach $10 billion by 2006; and local purchasing to reach $10 billion in China within the next five years.

Motorola has invested about $3.5 billion in the Chinese market, with an emphasis on facilities to make wireless telecom equipment, mobile phone handsets and semiconductors. It is touted as the largest foreign investor in China's electronics industry.

The company, which has a staff of about 15,000 in China, said it would shift some of its manufacturing capacity to China, a move that would clear the way for the hiring of about 4,000 engineers and researchers and add $1 billion in R&D to the existing 18 R&D centers.

The Motorola China statement, which was short on specifics, said it would also turn its attention to the convergence of wireless and the Internet in China.

"A reform is under way as operators are providing more value-added data services. A bright future can be forecasted with more advanced application enabled handsets like the Caller ID and mobile Internet surfing, larger network capacity and improved products and operator services," it said.