The optical communications market in China has pulled out of a slowdown and got back onto a firm footing in the first half of the year, according to Wang Lei, senior analyst with CCID, a consulting firm shored up by the Chinese Ministry of Information Industry.

Heated competition in optical fiber and cable

CCID predicted that the mainland optical fiber and cable market will grow by 5 per cent to 10 per cent in 2004 compared with one year earlier, basing on the fact that domestic telecom carriers were stepping up competition and building backbone networks one after another.

CCID anticipated fiercer competition in the market this year because the present capacity was already over 30 million core kilometers, twice the actual demand.

In February, the Dutch communications giant Draka Holding and Alcatel decided to combine their global optical fiber and communication cable businesses into a jointly owned company.

In optical fiber and cable, the combination would be the undisputed number one in China, through the combination of Alcatels assets with Drakas interest in YOFC, the leading Chinese optical fiber and fiber cable manufacturer.

CCID analysts expected to see more mergers and acquisitions in the fiber-optic industry this year and eventually, the number of players in the mainland market would be cut to five to 10.

Experts also believe that in light of the current conditions, the anti-dumping charges against imported optical fiber would hardly boost the home industry.

In June the Ministry of Commerce unveiled a primary ruling of the anti-dumping charge, saying that optical fiber imported from the United States, Japan and the Republic of Korea have done substantial harm to the domestic fiber-optic industry.

However, the verdict had no significant impact on Japanese firms, who could easily ship the raw material to their fiber-optic joint ventures in the mainland and evade the anti-dumping accusation, said experts.

CCID predicts that the mainland optical fiber and cable market will surpass 13.0 million core kilometers this year, with no major price fluctuations.

Steady growth of optical communication equipments market

CCID predicts that the optical communication equipments market will be valued at 12.0 billion yuan (US$1.45 billion) in 2004, up 10 per cent from the previous year.

Domestic companies have been expanding their presence in the booming market for these years. Of last years 11-billion-yuan market, the Chinese telecom giant Huawei Technologies seized the lions share of 50 per cent, its two closest rivals ZTE and FiberHome contributed another 25 per cent.

Technological innovation has become the deciding factor of the optical communications market in China, concluded experts.