ASX-listed distributor Quadtel has pounced on one of the many opportunities emerging from China's new market-driven economy, signing an exclusive supply contract with GWT Technology worth $25 million over the first 12 months.
Quadtel will supply GWT with
telecommunications-based equipment such as CPE (consumer premises equipment), DSL modems, caching equipment, wireless microwave equipment, billing systems and DSLAMs (digital subscriber line access multiplexers) for the rollout of its Ningbo Telecommunications Project. Under the project, GWT will provide 2600 businesses in the Ningbo region of China with Internet connectivity, voice communications and a high-speed wireless environment.
Quadtel has already received its first order: $A1.8 million worth of equipment for GWT's trial rollout at the end of March.
Quadtel CEO Rodney Orrock heard about GWT's Ningbo Project last year and started negotiating in October.
"We found out about GWT and the Ningbo Project from our financial advisors, London Partners," he said. "Peter Patterson, a major shareholder in GWT and who put the Ningbo project together, came to us and asked if we wanted to come on board.
"We made a $3 million investment in GWT equity shares which basically secured us the exclusive supply contract. So we now have a 7.5 per cent ownership in GWT," Orrock said.
China's recent entry into the World Trade Organisation and its new commitment to developing a market-driven economy has made it possible for foreign companies to reap the benefits from an immense marketplace, with more that 1.3 billion consumers.
According to Orrock, there are many opportunities for Australian IT channel companies, particularly in the service and supply of telecommunications equipment. "GWT Telecommunications is one of only six licensed telcos operating in China [Australia has about 1000] yet they have a population of over a billion."
However, Orrock said that in order to take advantage of these opportunities, companies need to have people on board who have specialised knowledge of China's economic, political and business landscape.
"The Chinese Government has a 51 per cent controlling interest in all Chinese businesses, so you're dealing with a very different business environment. Companies need people who understand China's government policies and work relationships, and have contacts working in the environment in order to get involved in the opportunities emerging over there."
The Ningbo contract is the second exclusive supply contract Quadtel has landed in the past three months. The company recently signed a three-year supply agreement with InReach Communications, worth $2 million annually.
Quadtel is in the process of
securing two more exclusive supply contracts in Australia and China, Orrock said.