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Last Updated: Wednesday, 7 September 2005, 06:19 GMT 07:19 UK
Ericsson to invest $1bn in China
Ericsson chief executive Carl-Henric Svanberg
Ericsson chief Carl-Henric Svanberg is focusing on emerging economies
Phone equipment manufacturer Ericsson said it plans to invest $1bn (544m) in China over the next five years.

The money will fund research and development, as well as expanding manufacturing facilities to meet the increase in demand for phone services.

Ericsson said that it would focus on 3G systems, which allow users to download larger amounts of data more quickly and access services such as music videos.

Ericsson also plans to use the money to finance "significant local purchasing".

Contract competition

With a population of 1.3 billion, China is a phone market with huge potential.

The state is currently assessing bids for 3G mobile phone licenses, and is expected to announce winners in the first half of next year.

China is also expected to reform its telecommunications industry, with an eye to making it more efficient and cheaper.

Ericsson has been positioning itself to benefit from the expected growth in demand for phone transmitting equipment and said in July that it was taking market share from rivals.

The Swedish company said it was seeing good growth in developing economies such as China and India as existing operators update and expand their networks.

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