Qualcomm in China Why Does Term Paper

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The U.S. government, for example, could back the CDMA technology by promising China that it would support its candidature for the WTO, where eventually China acceded.

3. To what extent do economic factors?

The economic factors are essential in explaining the global leadership of GSM, mainly because of the economies of scale that can be made when dealing with the GSM technology. The economies of scale are evident in terms of the equipment, going as far as the handsets, for example. This means that despite a cost advantage for the CMDA, the economies of scale obtained from the GSM technology can virtually nullify this and make GSM more profitable.

On the Chinese market, economic considerations also played an important role in the competition between GSM and CMDA. First of all, China Unicom had already invested significant sums of money in the development of a wireless network based on GSM, so it wasn't very open to make new investments in order to implement a CMDA network as well.

Second, a lot of the discussion revolved around the royalty rates that QUALCOMM asked for and the need to lower this in order for Unicom to remain profitable after implementing the CMDA technology. This meant that negotiations in China often went beyond actual political matters and into simple evaluations of potential profit or loss. In this case, in certain conditions, the GSM technology in China, which Unicom was already successfully using, meant lower costs and higher profits.

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Once CMDA entered the game, new economical conditions needed to be negotiated for the QUALCOMM royalties.

4. Are the economic and political factors independent of each other?

In my opinion, in a country like China, the economic and political factors are strongly dependent on one another. However, I think that this argument can also be supported at a global level, because economic factors can always be balanced by political factors. In this case study, for example, we have seen how the first step in QUALCOMM's bid for the Chinese market had been a lobby with the U.S. government rather than with the local Chinese government, for example. Similarly, we might expect powerful companies in Europe, such as Nokia or Ericsson, to have made political pressures at an EU level in order to support the GSM technology and discourage any potential introduction of new technologies on a market they dominated. From this point-of-view, while we can agree that the economic factor will drive the initial choice of the market, for example, the political factor will strongly intervene on the market regulation and in decision making......

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