Amidst camera flashes and applause in front of a blue banner which read “everyone cares about environmental protection,” in Chinese, The Wireless Source, a Michigan-based U.S. company, announced a strategic partnership with Beijing Digital Telecom on September 25, 2002. The two parties decided to pool their efforts to collect second-hand cell phones, refurbish them and redistribute them throughout China. The deal was a direct result of the U.S. Commercial Service’s assistance.

The Wireless Source is one of the world’s leading distributors of new, used and remanufactured wireless phones. Beijing Digital Telecom is one of largest cell phone distributors in China. Together, they will take on the world’s most dynamic telecom market. China currently boasts of 200 million mobile phone users, with an additional 5 million cell phones being added each month. Industry analysts predict that the handset replacement rate is about 40 percent and is valued at $400 million or 70 million cell phones.

Although tremendous potential exists in China, it is by no means an easy or transparent market to enter. It is a place where reality often comes back to bite you, especially for small and medium sized exporters who do not have the in-house resources that the multinationals have. The Wireless Source had been watching the Chinese market for years. Company President Bob Sullivan had traveled to China a few years ago when the markets were just opening up, and only large, multinational corporations had a strong presence.

Then in March 2002, when Automation Alley’s Small Business Export Initiative in cooperation with the Department of Commerce announced a trade mission to China, Mr. Sullivan decided to take another look. After extensive pre-mission counseling from the U.S. Commercial Service, Mr. Sullivan jumped at the opportunity of a return trip to China – this time with the goal of entering the market.

On May 5, 2002, Sullivan and representatives from 14 other companies made the trip to China for an 11-day trade mission, taking them to Beijing, Shanghai and Suzhou. The U.S. Commercial Service arranged tailored meetings, that in Sullivan’s words were “outstanding and beyond his expectations”. He and his team met with Chinese government officials, handset manufactures and distributors. Their goal was to propose a program to refurbish used cell phones and redistribute them in rural areas ¾ in an effort to provide affordable cell phones to all Chinese citizens.

“China has the largest mobile phone network in the world. Yet only 13 percent of its population is currently on the network. Our plan provides an economically viable way to provide access to affordable cellular phones, the key to accessing the network,” Sullivan said. “In many cases, a new phone is not an option, as it could cost more than 30 percent of a typical Chinese worker’s annual income. China is a critical market for my industry. We can’t ignore it, we have to be there.”

With the U.S. Commercial Service’s persistence, insightful advice and effective counseling, the Wireless Source performed crucial due diligence – which led them to choose Digital Telecom as its strategic partner. The recently held promotional event highlighted the environmentally friendly aspect of the refurbished handsets.

Bob Sullivan believes the U.S. Commercial Service support was a key factor in the recent deal that allowed The Wireless Source to enter the market so quickly. “There is no way any individual company could leverage this much energy and potential on their own, without the assistance of the U.S. Commercial Service”.

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