BEIJING -(Dow Jones)- Siemens AG (SI) Chief Executive Heinrich von Pierer said the company exceeded its expectations for profit from its business operations in China since the May launch of a 12-point strategy for growth.
Speaking to reporters at a news briefing, Pierer said Siemens' sales in China in 2004 grew 15% year on year to EUR3.8 billion. New orders rose 20% in the same period to EUR4.2 billion, he said.
Siemens, Germany's largest electronics and engineering company, launched its 12-point program for China in May 2004. The program aimed to boost sales through a EUR1 billion investment in long-term projects.
"Overall we gained market share in China," Pierer said. "It's especially gratifying that our substantial growth rates didn't come at the expense of sound profitability."
Siemens, like most multinational companies, doesn't provide a breakdown of profits on a country by country basis in its annual report. But Pierer said the company has "considerably exceeded our profit expectations for China."
Pierer said he expected to announce at the Jan. 27 meeting this year a "concept" for handling Siemens' global mobile handset division, a unit whose performance he has previously described as not acceptable. But he wouldn't comment on reports that Chinese handset maker Ningbo Bird Co. (600130.SH) was a potential buyer.
Pierer also said he expected China's government to make a decision soon on the likelihood of extending the maglev rail link in Shanghai to Hangzhou in neighboring Zhejiang. But he expressed doubt whether the government has even begun to formally consider a very high speed link between Beijing and Shanghai which could possibly use the maglev technology.
Developed by Germany's Transrapid International Consortium, the world's only commercial high-speed magnetic levitation line runs between Shanghai Pudong International Airport and the city's eastern suburbs. The $1.2 billion maglev uses a powerful magnetic field to suspend trains above the rails to reach a top speed of 430 kilometers per hour.
Pierer said there has never been a concrete proposal put forward by China, with former Premier Zhu Rongji only suggesting extensions of the maglev to Hangzhou and Nanjing in nearby Jiangsu province.
He said the government is conducting a feasibility study on the Hangzhou line "and the Chinese will have to decide what is in their best interests."
"I expect a decision on this, positive or negative, this year," he said. If the project proceeds, Pierer said he expects some of the local content to be supplied by Siemens' joint ventures already operating in China.
Siemens also expects to bid to supply high-speed rail carriages when China announces its purchasing plans within the next few months, Pierer said. In 2004, China accepted bids for supplying intercity carriages capable of a top speed of 200 kph, and Pierer expects a new round of orders this year for a slightly higher top speed.
He also predicted a decision this year by China's regulators on the preferred standards for third-generation mobile technology. One of the candidates is the China-grown TD-SCDMA standard jointly developed by Siemens and China's Huawei Technologies Co. (HWI.YY).
TD-SCDMA, or Time Division-Synchronous Code Division Multiple Access, is one of three competing 3G wireless network standards being considered by China for possible rollout by its four major telecommunications operators.
Pierer said whatever China's decision, the country's large number of mobile phone subscribers will eventually ensure it's a driving force in wireless technology in other countries.
"China will play a very important role in mobile wireless communications ... because they are the biggest users of mobile phones. They have 300 million users," he said.
Pierer also played down suggestions that TD-SCDMA is only complementary to its WCDMA and CDMA 2000 rivals rather than a 3G standard in its own right. "The Chinese will never decide on a standard that plays an inferior role," he said.
He denied a report that Siemens is exiting the Chinese power market through its sale of Hanfeng power station, stressing that the company will continue to be a major supplier of generation equipment to power producers.
Siemens and a unit of Sweden's Vattenfall Group (VTF.YY) this week sold their 40% stake in the Hanfeng Power Plant to Huaneng Group, China's largest power company, and the State Council-backed CITIC Group.
Company Web site: http://www.siemens.com
-By Owen Brown, Dow Jones Newswires; 8610 6588-5848; owen.brown@dowjones.com
-Edited by Sharon Buan
(END) Dow Jones Newswires"
Posted to the site on 6th January 2005
Posted to: www.cellular-news.com/story/11617.php