THE Shanghai telephone authorities are expanding their mobile phone network by placing a major order with Motorola, the US electronics group, to expand the capacity to more than 40,000 subscribers. Motorola said yesterday the contract, for an unstated amount and paid in hard currency, was the largest cellular order it had received from China. Mr Richard Sell, director of operations for Motorola's north Asia cellular infrastructure division, said the equipment was ''state of the art''. ''It's not a second-class system by any means,'' he said, adding that the EMX2500 equipment being supplied was the most advanced analogue equipment the company sold. The contract with the Shanghai Post and Telecommunication Administration is for fixed network equipment, and not for handsets, which can be bought from a number of manufacturers including Motorola. Mr Sells, recently in Shanghai, said mobile phones had still to become the mass-market product they were in Hongkong, and were still largely used only by senior business people, although he expected this to change. Like an increasing number of telecommunications manufacturers, Motorola is looking to the mainland for growth in the face of poor markets elsewhere. ''Our business in Asia is a large part of our infrastructure business and it is the most rapidly growing area in the world,'' he said. ''Business in the UK is a little flat, business in the US is a little flat as well. But the business in China is growing rapidly.'' Although penetration of both mobile and conventional telephones is behind that of Guangzhou, Shanghai is trying to position itself as China's main centre for telecommunications. Earlier this month it was announced that the world's largest telephone-exchange factory would be built in Pudong, across the Huangpu River, by a joint venture involving Alcatel Bell, one of Europe's largest telecommunications companies. US telecoms company AT&T also has a joint venture in the city.