German conglomerate Siemens AG announced last week in Beijing its acquiring of a majority stake in a leading Chinese wireline network equipment supplier and pledged to further increase its investment in China.

With the acquisition, Siemens has increased its share in the Beijing International Switching System Co Ltd (BISC), Siemens' very first manufacturing joint venture established in China in 1990, from 40 per cent to 67 per cent. In the future, the joint venture will be doing business as Siemens Communication Networks Beijing (SCNB).

In conjunction with the acquisition, Siemens announced further investment in the company to triple the research and development (R&D) workforce of SCNB to 300 in the coming months.

The move indicates Siemens' emphasis on the Chinese market and its strategy to make SCNB one of its global R&D bases as well as a major telecommunications equipment manufacturer.

Siemens anticipates a worldwide growing demand for convergent telecommunication offerings and it is responding by a reorganization of its telecommunications operations that will be effective from October 1 this year.

Anton Schaaf, who will be a board member of the reorganized Siemens Communications Group, said the increased investment in the joint venture demonstrates "how much weight China will continue to have for Siemens Communications."

Lothar Pauly, who will become the head of Siemens Communications Group, said: "Operators and enterprises want one-stop shopping for seamless interacting technology solutions. And residential customers are looking for devices that will offer them access to information wherever they happen to be. Our new group will be the manufacturer to offer the entire end-to-end product portfolio."

The new alignment will consolidate the previously independently operating wireless and wireline groups of Siemens into a single entity.

In this process, Siemens and China will be a pioneer in integrating wireless and wireline businesses.

"With this move, we are rigorously responding to the changing technology and economic needs of our customers," Pauly said.

Schaaf said China's telecom operators placed especially great value upon innovative technologies and had strong growth potential.

With more than 290 million wireless and 270 million wireline subscribers, China is already the world's largest telecommunications market.

By 2007, Schaaf says he expects the number of mobile phone customers in China to jump to 500 million and the number of wireline subscribers to rise to 330 million.