IP protection seals the deal (hktdc.com)


	Didier Dutronc outlines Wavecom's growth since establishing its regional headquarters in Hong Kong

French technology company Wavecom set up its Asia Pacific headquarters in Hong Kong in 1998 when it found that about 80 per cent of its worldwide business was done in and through the city.

Didier Dutronc, President Asia Pacific and Managing Director Wavecom, said the company knew from the start that Hong Kong would be a good base for operations. Wavecom is a fabless company dealing in embedded industrial wireless communication solutions for automotive, machine-to-machine and mobile professional applications

"Hong Kong is just five hours away from any place in Asia. It is close to the Chinese mainland and has great infrastructure in transport and telecommunications. Most important to us, there is intellectual property protection under the British law," said Mr Dutronc. He said Wavecom technology was "stolen" in the mainland several times and it was difficult to sue because there was no IP protection there.

Increased R&D capacity

In 2006, Mr Dutronc said he was faced with the overwhelming question of whether to expand in Hong Kong or move to China as the company had acquired Sony Ericsson's M2M business and was all geared up for expansion. "There is still the IP issue and we didn't want our technology stolen again. We had 80 staff in Hong Kong and the costs of moving to China would be high."

Wavecom decided to expand in Hong Kong instead and moved to the Hong Kong Science Park (HKSTP) to increase its R&D capacity. "The cost per square foot was much cheaper in HKSTP which provides superb technology and training support for SMEs. It has a huge wireless telecom lab which is useful for our purpose. There is stability and good engineering skills. HKSTP's proximity to the mainland, being just fifteen minutes away, is a great help as we manufacture in China and our market is in China," explained Mr Dutronc. "We also do all our sales business and transactions in Hong Kong. We prefer to deal in US dollars and not in renminbi."

Wavecom's Hong Kong R&D centre is now the third largest in the world after France and N. Carolina in the US. The company's products are manufactured in Suzhou working with contract manufacturer Flextronic, a US/Singapore company. "We used to manufacture in Taiwan and Mexico but we have moved solely to China now for our production. Half of what we produce here is for the world market and the other half supplies local markets in China, Japan, Australia, India and Korea, etc."

Strategic expansion

In August 2006, Wavecom formed a joint venture with Hong Kong company Sunlink. The partnership agreement enabled Wavecom to form a joint venture company called Sunlink-Wavecom HK Ltd with a subsidiary in Shenzhen, southern China, to build an engineering competence team in Wireless and market products in China with licensed Wavecom technology. It also has a supply agreement whereby Sunlink can buy components and software from Wavecom to be integrated in Sunlink products.

"The partnership also helped established a business model to allow competitiveness against mainland vendors who don't pay IPR. It helps to protect our IP creation in Hong Kong under British law, reduces our risk in the China market, promotes Wavecom technology and at the same time gives us the benefit of low cost resources for R&D using easy interaction between Hong Kong and Shenzhen," explained Mr Dutronc.

It is a good working relationship, he said, as each party explores the benefits of a win-win situation. Sunlink has recently launched the TAXI4U service in Hong Kong using Wavecom Wireless CPU Q24 Plus technology for more reliable and better service to its passengers. The project is targeted to equip 30 per cent of the 18,000 taxis in Hong Kong when fully implemented.

Mr Dutronc said that currently about 50 per cent of Wavecom's worldwide revenue comes from Europe, 30 per cent from the US and 15-20 per cent from Asia Pacific. "I believe growth will be higher in Asia Pacific perhaps in five years time," he said.

Local knowledge

"We have to be in Hong Kong to understand how huge the markets in China and India are. As the two giant economies develop further, Wavecom is moving more towards service value-added which is very different from just selling electronic components. The challenge is to identify and build the business in these markets as we cannot just copy and paste our success in Europe," he added.

Founded in 1993 and headquartered in Paris, Wavecom has its Asia Pacific headquarters in Hong Kong with offices in Tokyo, Japan and Beijing, China. The Euronext and Nasdaq-listed company also has subsidiaries in Research Triangle Park, in North Carolina, US and Farnborough in UK.