Vodafone, the world's largest cellular operator by revenue, on Friday launched the China Sourcing Center (CSC) with an aim to more than double its annual procurement in the country within three years.
This marks the trend among international telecom operators looking at China to source telecom equipment and mobile phones to cut costs and stay competitive in the global market.
It will provide a boon for major Chinese telecom manufacturers such asHuawei Technologiesand ZTE Corp, already increasingly popular with overseas operators.
According to Detlef Schultz, global supply chain management director at Vodafone, the firm has sourced hardware in China worth 200 million euros.
"We expect to increase the annual sourcing volume to 500 million to 1 billion euros within three years," he told reporters. He said that the launch of CSC will help improve the management of Vodafone's global supply chain and help the company remain competitive in the global market.
The CSC will lead the negotiations between Vodafone and Chinese manufacturers for supply of hardware such as mobile telecom equipment. Mobile phones are not included in the function of CSC.
Last year Vodafone awarded an order to Huawei, the top telecom gear maker in China, to expand its 3G networks in Spain. Before that the two firms signed a global agreement to supply network infrastructure.
Huawei and ZTE have been expanding their operations overseas very aggressively, starting with developing countries. They are now also winning favor with leading global operators such as Vodafone and Britain Telecom, posing a threat to established Western manufacturers such as Ericsson and Nokia.
Huawei is already providing customized 3G mobile phones to Vodafone. They are now being sold in a number of European countries under the Vodafone brand.
