Jane Chen / Shanghai Daily news

In line with its strategic reforms, US-based telecommunications firm UTStarcom (China) Ltd. will earmark 1.4 billion yuan (US$169 million) to expand mobile phone production, mostly 3G phones, today's Oriental Morning Post reported.
Eyeing the fledgling 3G, or third-generation, market and expecting the new telecom technology to overtake its sole business, Little Smart, a cordless phone system, UTStarcom announced on March 14 a global strategy to develop low-cost phone manufacturing in China.
The Nasdaq-listed company is proposing to the National Development and Reform Commission the building in its research and development center in Hangzhou, Zhejiang Province, of phone production lines with a combined yearly capacity of 42 million handsets, the Youth Daily said.
One of the lines is for GSM (Global System for Mobile Communication) phones with a yearly output of 17 million, and the others, with a yearly output of 25 million, will focus on 3G phones, covering all the three CDMA 3G standards: WCDMA (Wideband Code Division Multiple Access), CDMA2000 (Code Division Multiple Access 2000) and TD-SCDMA (Time Division - Synchronous Code Division Multiple Access).
Fixed-assets investment in the project totals 789 million yuan and fluid capital will reach 600 million yuan.
The 3G project, which will take four years to complete, will see 75 percent of the phones exported to other countries and areas.
Industry insiders are worried that China's mobile phone market is already oversupplied, citing official data. They said the country would produce more than 500 million mobile phones this year, over 80 percent of the world's total demand. 
But domestic rivals seem relaxed about UTStarcom's entry. 
Li Xiaolong, market supervisor of Aux Group's mobile division, believes UTStarcom's entry will not affect the domestic market which is dominated by such overseas phone makers as Nokia, Motorola, Samsung and LG.  As for the global market, he predicted the competition will not be fierce with domestic phone makers, because their overseas markets are not overlapping.
Li's view was echoed by Dai Maoyu, acting vice general manager of the Ningbo Bird Co Ltd.  He said UTStarcom's overseas market focuses on North America, while most domestic phone makers mainly expert to Europe, Southeast Asia and South America.
Analysts describe UTStarcom's new strategy a result of two concerns.  One is the company aims to use China's cheap costs to gain advantages in the global market.  The other is UTStarcom, which used to rely solely on the Little Smart business, hopes to expand its product lines to offset the risks.
UTStarcom holds 60 percent of the equipment market and over 50 percent of the phone market in China's Little Smart sector, which recorded 7 million subscribers by the end of last year.