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.

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