China calling

A flurry of high-tech companies on Long Island are looking east, finding a lucrative market in China for wireless and other communications technology.

Comverse Technology Corp., Globecomm Systems Inc. and Park Electrochemical Corp. are pumping up operations on mainland China and Hong Kong while

Hauppauge-based Globecomm, which this week closed on a deal for more than $1 million in equipment and services for satellite communications to a provider in China, said 15 percent to 20 percent of its sales are now in Asia. About 5 percent of its business is in China, with more expected in upcoming years.

Woodbury-based Comverse does about $12 million in annual sales in China, a sliver of what its sales could be, but much more than just a few years ago. The company on Wednesday said it closed the sale of software to six mobile phone operators in Hong Kong.

And Lake Success-based Park Electrochemical Corp., which does more than $520 million in annual sales of circuit boards for the telecom industry, recently announced that it would open an office in China to increase sales there.

Late last year, in possibly the biggest commitment of a wireless company to China, Motorola announced a $1.2 billion investment to build a factory 70 miles from Beijing to serve China and other global markets.

Long a sleeping giant in the telecom market, China appears to be waking.

"The demand is growing for sophisticated products, of the type U.S. firms manufacture for telecommunications," said John Foarde, vice president of the U.S.-China Business Council, a trade association of U.S. corporations doing business in China. "China's growing economic power, and success, is going to fuel demand for products from a number of countries, including the United States."

Comverse officials agree that China in recent years had been a relatively sluggish customer. But helped by a stronger yen and more robust economy, the nation is becoming a more important market for wireless telecom equipment.

"Up until very recently, the majority of people in China didn't even have access to telecommunications," said Comverse CFO Paul Baker. "Over the last several years, China has been rectifying this situation and bringing communications access to as broad a coverage as possible."

He said the sheer size of China makes wiring the nation equivalent to rebuilding the Great Wall, another reason that wireless telecom is taking off.

"It is faster and more cost-effective to build out wireless infrastructure than to build out wireline," Baker said. "Not surprisingly, you see wireless user bases in developing countries like China."

China is already the United States' fourth largest trading partner and the United States is China's second biggest partner, according to the U.S. Chamber of Commerce in Washington. In 2000, U.S. companies exported more than $16 billion in goods to China, up 24 percent from the previous year. Wireless sales, though, are only starting to kick in, as the Chinese economy recovers from a meltdown a few years ago.

Hong Kong, now part of China, has also become a major market in that nation, boosting the telecom trade. Comverse said that all six wireless operators based in Hong Kong - Hong Kong CLS, Hutchison Telephone, New World PCS, Peoples Telephone, SmarTone Mobile Communications and Sunday O/B Mandarin Communications - agreed to buy software allowing text messages to be exchanged between their networks.

"They have money. They can finance projects," Globecomm CEO Ken Miller said, noting that Hong Kong is booming. "There's a lot of demand for telecommunications, because there's a lot of trade there."

"Being in Hong Kong," he added, "we're positioned to seek opportunities on the mainland and we can service the whole Asia-Pacific region."

Even Long Island telecom companies that have no base of operations in China are seeking to set up shop there as China jockeys for World Trade Organization status.

"What we're doing in China is opening up a business center with about 15 employees," said Park CEO Brian Shore.

"To develop the market in China. The product we will sell into China will be made in Singapore."

Others note that doing business in China, while it remains difficult, is slowly getting easier. Regulations, as China works to enter the WTO, are loosening.

"The overall regulatory environment is improving," said John Holden, a spokesman for the National Committee on U.S.-China Relations, a not-for-profit organization promoting ties between the United States and China. "It's easier to set up wholly owned ventures. The economy is less dominated by government-owned entities."

Competition also for the first time is coming to China's telecom market. China's Ministry of Information operates China Mobile, the biggest wireless phone carrier, Baker said. China Unicom, partially owned by the government, is competing and regional providers also are growing bigger.

"The telecommunications sector in China is (becoming) competitive," Foarde insisted. "It (admission to the WTO) could well liberalize the ability of US. companies to compete, particularly for telecommunications services in the China market."

Comverse, which recently became the first U.S. company to earn a license to sell voice mail and messaging services to telecoms in China, noted that Chinese companies are in a rush to add new services as they begin to vie for customers.

"Up until recently, there was one game in town. A year or two ago, you started seeing some competition in wireless in China," Baker said.