China's 3G telecom business is estimated to generate a total investment and consumption of one trillion yuan in three years, according to Zhao Bo, vice director of the electronics and information department of the Ministry of Industry and Information Technology (MIIT). 

This includes a 400 billion yuan investment from carriers, namely China Mobile (0941.HK; CHL.NYSE), China Unicom (0762.HK; 600050.SH; CHU.NYSE) and China Telecom (0728.HK; CHA.NYSE), for network construction, 400 billion yuan consumption for users to purchase 3G end products such as mobile phones and network cards, and between 100 and 200 billion yuan to be consumed for 3G audio and visual information services.

The world's mobile phone producers have been relying on emerging markets such as China and India to secure their growth, and are now searching abroad to forget the downturn at their doorstep.

iSuppli statistics show that China's mobile phone sales grew nine percent quarter on quarter in the first three months of 2009 to 58 million units, in spite of the dismal world market.

The annual sale of mobile phones in China is forecasted to go up 7.8 percent to 238 million units in 2009, while the world's delivery may slide to 1.1 billion units.

Thanks to the potential 3G business, China's domestic end producers enjoyed rapid progress.

Xiong Hui, vice president of ZTE's marketing for handsets, said that the delivery of its end products, including mobile phones and data cards, amounted to 10 million units in the first quarter, up 30 percent year on year. The annual sale of mobile phones is estimated to exceed 60 million units.

Huawei, another leading telecom end-product producer in China, recorded a mobile phone delivery amount of 6.6 million units in the first quarter, with most of those units sent abroad. Its delivery of data cards in the first quarter soared 50 percent to 5.1 million.

"Domestic producers will need to upgrade technologies to catch up with foreign-funded enterprises, which have already mastered more core technologies of 3G standards," said Chen Jinqiao, deputy chief engineer of the MIIT's telecommunications research institute.

In addition, 3G's lifecycle may last for a decade, applicable only between the aging 2G and approaching 4G standards, acting as a bridge between the two technologies. The industry should cooperate so as to leapfrog over other 3G competitors.

Chen suggests the government offer more preferential policies to push the 3G industry along its path, such as expanding government purchases and subsidies, and helping to reinforce cooperation between carriers and end producers.

Source:Xinhua