IBM and Great Wall group launch $25 million venture

IBM and Great Wall group launch $25 million venture

BEIJING (Reuters): U.S. computer giant IBM Corp and China
Great Wall Computer Group announced on Tuesday the launch of a
US$25 million plant in Beijing to make circuit boards for Nokia
Corp mobile phones.

The joint venture signals an opportunity for electronics firms
to cash in on China's booming wireless market as Beijing requires
cell phone makers to buy their components domestically.

The plant, called Beijing GKI Electronics Co Ltd, has already
been built in a new technology park developed by Nokia and will
begin delivering printed circuit cards early next year, Henry
Chow, chairman of the IBM Greater China Group, told reporters.

It is owned 70 percent by IBM China and 30 percent by Great
Wall Shenzhen Co, and is similar to a profitable circuit board
plant operated by the partners since 1995 in the southern city of
Shenzhen, Chow said.

That plant, called Shenzhen GKI, manufactures circuit boards
mainly for personal computers. Both plants have flexible assembly
lines capable of producing boards for all sorts of electronics
customers, he said.

"The combination of the Beijing and Shenzhen capacity will
allow us to produce a million cards a month," Chow said.

The initial focus would be on cards for Nokia, he said.

Ventures supplying mobile phone manufacturers are likely to
multiply in China as its rapid growth in mobile phone sales,
twinned with strict Chinese import quotas, drive foreign wireless
companies to localize every aspect of their production lines.

On Monday, U.S. telecoms equipment maker Motorola Inc said it
has become the largest foreign investor in China with approval to
invest $1.9 billion in a massive new silicon chip-making complex
and factory expansion in Tianjin

In May, Nokia broke ground on the vast Xingwang International
Industrial Park in Beijing, which it and the Chinese government
hope will lure $1.2 billion in investment from foreign and
Chinese suppliers to Nokia.

The new venture between IBM and Great Wall is the first tenant
in the park besides Nokia, which has made the 40-hectare (100
acre) campus home to its largest plant in China.

Beijing, in an attempt to master foreign technology which
would help it beef up state-owned telecoms companies and create
jobs, enforces strict quotas on imported mobile equipment.

It requires foreign manufacturers to localize assembly of
handsets and network gear in exchange for share of the market --
the world's second largest with more than 56 million subscribers.

But increasingly, Beijing is requiring phone makers to
localize not only assembly, but sources of components as well.