High-profile China deals make old news

PUBLISHED : Monday, 26 January, 2004, 12:00am
UPDATED : Monday, 26 January, 2004, 12:00am

The US$2.3 billion in business that mainland companies 'gave' United States technology manufacturers two weeks ago included almost $1 billion in contracts that had already been awarded.

In a high-profile ceremony on January 13 attended by mainland and American officials, US telecommunications and computer equipment makers signed contracts worth US$2.3 billion with Chinese companies.

However, the contracts included US$1.07 billion in old deals for Motorola which had been awarded last year.

The signing ceremony was part of a 'buying mission' of mainland companies led by Lou Qinjian, vice-minister of the Ministry of Information Industry.

The public relations trip was the third since November and part of attempts by the central government to ease worries in the US about the yawning trade deficit between America and China, which US officials blame on what they say is an artificially weak yuan.

Buried in Motorola's recent earnings statement to the US Securities and Exchange Commission was a clarification from the company that the bulk of the orders announced on January 13 were for sales and orders booked last year.

'The contract signing was ceremonial and in large part it recognised business that had been previously awarded,' Motorola said.

The company said it had been awarded contracts worth more than US$1 billion from China Mobile and China Telecom.

'Of the US$1.07 billion in contracts announced, approximately $150 million represents value-added tax, which is not recognised by Motorola in calculating orders or sales,' the company said.

'Of the remaining approximately US$920 million, approximately $857 million related to the segment's orders, of which $645 million in orders have been recognised in 2003 and $445 million of sales have been recognised in 2003.'

Motorola issued two press releases on January 13 announcing contracts with China Mobile and China Telecom - creating the impression they were new orders resulting from the Chinese trade trip.

At the time of the contract signing, US officials praised the deals, saying they would help improve bilateral trade relations between the two countries.

'These agreements will help generate corporate revenue and they will support high-technology manufacturing jobs in many American communities,' US Commerce Secretary Don Evans was quoted as saying.

Other companies at the signing ceremony included Lucent Technologies, which said it had won more than US$350 million in orders from China.

Mobile-phone manufacturer Ericsson signed a US$93 million deal. It was not clear whether those contracts were new or existing ones.