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January 7, 1988

PHILIPS ON BRINK OF THIRD PABX LICENCE AGREEMENT FOR SOPHO-X IN CHINA

By CBR Staff Writer

Philips NV expects to sign its third technology transfer agreement for its Sopho-S digital PABX in China on 4 February. The company has already signed with two of the 10 factories selected by the Chinese authorities for PABX technolgoy transfers. The company expects the three agreements to bring in around ?20m per factory over a total of five years, if they achieve only 80% of their objectives plus about the same amount for imports for Philips Hong Kong. That represents production of 60,000 to 70,000 lines a year from each factory although the plan is to have capacity for 100,000 lines per factory. The Chinese factories will at first semi-assemble and then assemble systems bought in from Eindhoven in Holland, progressing to integration and full manufacture by 1992. The deals are, however, still subject to CoCom approval, which Philips expects to get within the next three to four months. We have serious plans for the future in China, says director of marketing management Jaap Ellerbroek. We expect to be making money in China in three to five years and not just in PABX equipment. We aim to be producing such products as public switches and key systems, for example. Philips says it has been paid in hard cash by the Chinese authorities. The company claims no other factories have yet signed with PABX suppliers and it hopes to catch some of the remaining factories. It also has joint ventures in China to produce radio and radio recorder equipment in Peking, car radios in Hong Kong, colour television tubes in Nanginj and it is currently discussing a joint venture in lighting equipment. Plessey had expected to get approval for its ISDX PABX in China but is experiencing difficulties.

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