ZTE Corp and Huawei Technologies, the mainland's two biggest telecommunications equipment suppliers, have slashed selling prices by as much as half in their bids for China Mobile's third-generation (3G) mobile network orders, sources said.
ZTE had submitted the lowest price of the seven bidders at 12,000 yuan (HK$13,633) per carrier sector, a unit that measures mobile network capacity, sources said. It was 15 per cent lower than second lowest bidder Huawei's and about 50 per cent of its price in the second round of tenders last year, they said.
Datang Mobile, which won the biggest slice in the second round, bid 20,000 yuan per carrier sector, sources said. China Putian, China Postcom and foreign firms Ericsson and Nokia Siemens Networks also submitted bids, they added.
Analysts said ZTE wanted to use low prices to expand market share. The company had a 25 per cent share in the second round of China Mobile's tenders, only behind that of Datang Mobile.
'The company could maintain its profit margin despite the low bidding price,' said Shenyin Wanguo's analyst Fang Lu. 'The economies of scale and improved technology have significantly driven down costs.'
ZTE's long-term investment in TD-SCDMA technology, a standard adopted by China Mobile's 3G service, is paying off, as it has enabled the company to spend less on research and development in recent years.
Huawei is pinning hopes on its free upgrade of existing equipment to China Mobile, which has been in place since last year, to grab orders.