Feeling the sting of the worldwide tech slump and a sharp drop in mobile carriers' spending, US networking equipment maker Ciena is putting China at the very forefront of its business strategy and aiming high in the booming local market.
"No other market is as important as China for Ciena," said Gary Smith, president and chief executive officer of Ciena, a global provider of intelligent optical networking systems and software. "China is the No 1 focus of our company. Our objective is very clear: We want the No 1 market share in China in three years, led by next generation optical network systems, to help the country utilize the existing capacity, reduce capital and operating cost for its carriers and provide better services," Smith said during an interview with Business Weekly.
The president's remarks came after an agreement was clinched in February between Ciena and Beijing CEC-IDN, a joint venture of the China Electronic Corp, the largest electronics maker in China and Fremond, the California-based IDN Telecom.
According to the deal, Ciena will provide telecoms equipment to the China market.
On the heels of the agreement, the company established a software research and development (R&D) center in Shanghai, the country's financial hub, to boost its presence in the China market.
The president who has been a regular visitor to China since 1980, said he is greatly encouraged by the growing business opportunities generated by the tremendous changes which have taken place in the country since China opened its door to the outside world.
"Each time I come to China, there are more changes and more telecoms infrastructure," Smith said.
The president was in Beijing recently to "visit potential customers, business partners and government officials."
He revealed that Ciena is in discussion with several mobile carriers about deploying its lightworks system, but declined to give details.
Ciena has long been beating the drum for its intelligent networks system, which it claims can save over 60 percent in equipment expenditure costs as compared to the traditional system.
In a weak spending environment last year, Ciena outperformed several other telecoms heavyweights such as Nortel and Lucent. According to a recent survey by IDC, a leading telecoms market analyst firm, Ciena attained the global leadership position for long-haul dense wavelength division multiplexing (DWDM) system deployment in 2001, with the top market share.
With the deepening of the worldwide tech woes, Ciena reported its revenue fell 54 percent in its first fiscal quarter this year, ending January 31, compared with revenue of nearly US$352 million during the same period last year and cut its workforce by 22 percent in March due to the dramatically slower sales in the fibre-optics sector.
On the China side, major mobile carriers have announced easing up on their expansion binge this year, which is expected to put a big dent in telecoms equipment vendors' revenues.
However, the president said he is fully confident in China, which he claimed "is moving to the new technology era and is tending to use the latest technology" such as Ciena's equipment.
"Unlike legacy-type vendors such as Nortel and Cisco, Ciena can offer the latest technology to China to help its carriers reduce capital costs," boasted the president.
The company is poised to rise on an anticipated surge in China's network infrastructure spending after the completion of a dramatic shake-up in the country's telecommunications industry.
Last week, China Telecom, the former monopoly telecoms carrier, was formally broken up into two rival operators which many industry observers expect to unleash a flow of networking gear purchases soon.
Ciena is "increasing investment in research and development in China to firmly establish its business operations locally" to take advantage of such opportunities, Smith said.
"We are well positioned to make long-term investment in China," he said.
(China Daily May 31, 2002)
