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Tuesday, 10 September, 2002, 09:36 GMT 10:36 UK
Talking telephone numbers in China
Phones on display in a Shanghai shop
Mobile phone use is soaring in Shanghai

Helena Yu is an example of a modern Chinese woman.

Her Chinese-made Nokia 3310 mobile phone might be considered old-fashioned by some, but it is almost red hot with use.

In the half hour we talked, she handled eight calls. And that is without counting the text messages.

Helena has had a phone for only a year, and like many Chinese it has changed the way she works and lives.

In big cities such as Shanghai, mobile phone use is soaring, and manufacturers even set up roadside stands to peddle their latest products.

Helena Yu
Another call for Helena Yu
"Some people have several phones, just to be fashionable," says Helena, who works for a TV company.

Unlike many other goods, handsets are not cheap here.

An average price would be about $249 (160; 2,000 yuan) while the most advanced models can sell for $777.

But compared to the gradual uptake in many Western countries, they have rapidly become an integral part of everyday life.

Helena pays about $124 a month for her phone, including calls.

Well-connected

"I would like it to be quiet, but when it rings it means there's work for me," she says. "Sometimes I hate it."

Wha is astonishing when you visit a modern, well-connected city, such as Shanghai, is just how little of the mobile phone market has so far been covered.

Panasonic phones at CeBIT Asia in Shanghai
Talking phones at the CeBIT exhibition
There are an estimated 150m subscribers in China, not much more than 10% of the population.

Average penetration in western Europe is about 60% but some think it could reach 90% in China - that is clearly a huge market for the telecoms industry to tap into.

Currently the mobile mania is being driven by richer urban Chinese, especially on the east coast.

But in rural areas, fewer than a quarter of households have a fixed line phone, so pay-as-you-go mobiles could be attractive.

All this means potential profits for overseas businesses.

The UK's biggest company, Vodafone, already holds a minority stake in China Mobile, one of the big three players.

Deregulation

Nokia, Siemens and Ericsson are among the manufacturers with production bases in China, competing with about 20 domestic makers such as the conglomerate Haier.

However, at present overseas telecoms companies can set up only with a Chinese partner.

Gradual deregulation is under way following China's accession to the World Trade Organisaton and by 2008 domestic and international fixed line services will be opened up.

There is also a staged scheme allowing foreign companies access to the big centres of Beijing, Shanghai and Guangzhou, with other cities and provinces following over the next three years.

But it is not just the big firms which stand to benefit.

Filtronic is a UK company which has set up a production plant on an industrial park in Suzhou, 100km west of Shanghai.

Local sourcing

It makes internal and external antennas for handsets and parts for base stations.

The company has invested $13.4m and employs 350 people at two plants. It is currently fitting out a third factory for silver plating work.

Roger Wei of Filtronic in Suzhou
Filtronic's Roger Wei: Market is 90% empty
Because the government encourages mobile phone makers to source their components locally, it makes business sense for Filtronic to be in China.

"Ninety per cent of the market is still empty," says Roger Wei, who looks after Filtronic's sales throughout China.

"It was a good idea to build a factory here before our customers asked us to move.

Olympics

"It's really voice communication now - things like data and 3G will happen in the future. At the moment we are staying at the basic level."

Events like CeBIT Asia, held this month in Shanghai, demonstrate how advanced the technology has become in this sector.

"You've got to get in before it's too late, especially with the Olympics in Beijing coming up," warned one overseas delegate.

"They're not until 2008, but everything is likely to be ready in 2004."

Change and growth in this sector is sure to be speedy.

The mobile craze is one more revolution for Helena and her friends to contend with as the certainties of old communist China swiftly fall away.



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