Siemens and Huawei Technologies plan to form a US$100 million joint venture to develop the mainland's third-generation mobile-phone Time Division Synchronous Code Division Multiple Access standard (TD-SCDMA).
The company would have 250 employees, of which 160 will come from Siemens' existing mainland operations.
The home-grown standard would allow mobile-phone users to send pictures and data at high speed.
Siemens already has four field trials underway to test TD-SCDMA - in Shanghai, Beijing, Chengdu and Tianjin. The first products for commercial use will be ready next year.
But given the existence of competing standards globally and high development costs, there is some indication companies are jockeying for position until the market shakes out.
In addition, the partnership with Huawei raises questions about Siemens' earlier joint venture with Datang Mobile Communications Equipment, the originator of TD-SCDMA. Siemens and Datang had agreed to develop the technology for the mainland market.
Datang seems to have moved off in a different direction. Two days ago, Datang said it would partner with Nortel Networks - a Siemens competitor - to invest in a laboratory to develop TD-SCDMA technology.