China's smart card market is gradually segmented and the competition is more intense

The first thing that Shi Yuzhi, president of Gemplus Greater China, met with the reporter was to let him open the back cover of the phone and remove the SIM card. He pointed to the letter on the card - "GEMPLUS" proudly said: "This is our company." Compared with the multinational companies in the IT industry, the French company that provides China's first GSM/SIM card is even more Like an invisible champion. Ten years ago, the smart card industry was still a virgin land in China. At that time, Gemplus took up the top spot in this world without much effort. However, in 2005, the Chinese market has gathered the world's largest number of smart card manufacturers, which makes Gemplus quite a black cloud. In order to dance in the square of the smart card, it is obvious that the difficulty factor is getting bigger and bigger.

Pressure-doubled Chinese market

"Internet Weekly": Compared with the past, today's Chinese smart card market has gathered the world's largest number of manufacturers, is your pressure greater?

Shi Yuzhi (President of Gemplus Greater China): Yes. China's wireless SIM card usage has already accounted for one-third of the world's total, and with other applications, our major domestic competitors have also achieved good development. At the same time that Gemplus grew, our competitors also increased their rankings in the global market due to the increase in China's market share. Since the Chinese market is quite large, everyone's eyes are on it, so our market share has decreased compared with the previous years, especially in the face of domestic manufacturers, we must pay attention to adjust the price structure of products to improve competitiveness.

Internet Weekly: After these years, what changes have occurred in the Chinese smart card market?

Shi Yuzhi: Now China's smart card market is gradually subdividing and the competition is more intense. But overall, the situation of simply fighting for the market by price has slowly changed. In terms of telecom cards, in 2004, 16K cards accounted for 50% of the total usage. In 2005, the proportion of 16K cards will be surpassed by new products. This also increasingly requires the comprehensive competitiveness of manufacturers, which not only includes research and development, production, packaging and other aspects, the entire industry chain needs to have an overall improvement; in the financial card, it is not difficult to find that the market competition makes the past only Small manufacturers that do printing and packaging have reduced a lot, but manufacturers with full production capacity have continued to grow. Gemplus welcomes this change. We feel that the price war is very hard, and manufacturers' emphasis on R&D, production and service will bring healthy competition to the industry.

"Internet Weekly": There are already 360 million mobile phone users in China. With the number of users tending to be stable, will there be a negative impact on Gemplus, which uses SIM card as its main source of income?

Shi Yuzhi: The Chinese market is very special. In 2004, China's SIM card shipments were 300 million, which means that almost every Chinese mobile phone user used a card in 2004, so it is not enough to just look at the numbers. In fact, the rate of card exchange for Chinese users is very high. For example, the prepaid card for mobile phones may be used by most outsiders in Guangdong. Users will throw away the prepaid charges on these cards within a few months. And will not recharge. Even if the number of mobile phones tends to be saturated, the SIM card usage will not shrink.

"Internet Weekly": At the end of 2004, Axalto launched a dual-mode card to China Unicom. Can such technology be used by Gemplus? In terms of high-end cards, what are the advantages of Gemplus?

Shi Yuzhi: Gemplus is also doing this kind of product. In terms of high-end cards, Gemplus's strength lies in its rich international market experience and product safety guarantee. The SIM card operating system provided by Gemplus is particularly large, and the security aspect is the key point. After the security platform, it can be applied in the fields of telecommunications, finance and identity authentication. In addition, we also have our own advantages in terms of being close to our customers. We have accumulated rich experience in new business and new functions of smart cards, helping operators to carry out value-added services and achieve win-win results. For example, we have provided China Unicom with the first STK card for Unicom mobile banking, stock trading, e-mail and other services to provide commercial over-the-air services for China Mobile. This allows us not to passively wait for others to place orders, but to use global experience to help customers in the Chinese market develop new businesses.

Make up the business short board

"Internet Weekly": I remember that Mr. Russ, the founder of Gemplus, once said that it is only when the Chinese user has a Kempska, he retires. How far is Gemplus from this goal?

Shi Yuzhi: In 2004, Gemplus's total revenue increased by 15% over the previous year, reaching 865 million euros. Both market share and revenue are the world's number one in the smart card field. The outstanding performance of the Chinese market has contributed a lot to Gemplus. Although it has decreased from the absolute number of China's market share, the number of orders made in China has not decreased but has increased a lot. In 2004, more than 100 million mobile phone cards were issued, and we are more confident in achieving the goal of an average manpower card.

"Internet Weekly": Since the Chinese market has an important position in Gemplus' global planning, how much has Gemplus invested in the Chinese market recently?

Shi Yuzhi: 2004 is the tenth year for Gemplus to enter China. We have increased our investment in the Chinese market. The new plant in Tianjin has been completed and put into production. It can produce 160 million SIM cards per year. In 2005, we will expand its production capacity. In addition, we also focus on increasing investment in research and development. In September 2003, the company established a research and development team in Beijing with nearly 30 R&D personnel. Due to the expansion of personnel, especially the expansion of the R&D team, the Greater China headquarters also moved to a new home, moving from the Nanyin Building in Beijing's East Third Ring Road to the magnificent building of Jinbao Street.

Internet Weekly: So in 2005, what areas will Gemplus focus on?

Shi Yuzhi: We hope to continue to communicate with telecom operators, shift the use of telecom cards to the middle and high-end, and strengthen communication with telecom operators in 3G cooperation. I estimate that China will start piloting EMV chips in 2005, so we will strengthen our plans for EMV migration with the central bank and China UnionPay. In terms of identity authentication, we have to enter the e-government market with our partners. With the implementation of the Electronic Signature Law, electronic tax filing and e-commerce will have new developments, and Gemplus will also pay close attention to the emerging fields of these smart cards.

"Internet Weekly": Gemplus's revenue in China is mainly from the telecommunications industry, will it cause excessive dependence on a single industry?

Shi Yuzhi: If most of the revenue comes from a certain field, there is such a risk. In 2004, Gemplus ranked third in the world in the bank IC card market, which shows that we have invested a lot of manpower and material resources to develop smart cards in the non-telecom field. The implementation of EMV migration in China's bank card has been discussed in 2003. Gemplus is the first foreign manufacturer to cooperate with China UnionPay to develop China EMV migration specifications. There are also identity and security certification markets in Gemplus' global plans, which are also important business markets for us. We also hope that smart cards have more applications and hope to achieve a balanced ratio of different businesses. Gemplus's goal is to achieve 1:1 for telecom and non-telecom services.

Internet Weekly: What kind of preparation does Gimp in the 3G aspect?

Shi Yuzhi: 3G business is the strength of Gemplus, and there are fewer opponents in this field. Although the Chinese market has not yet launched 3G services, Chunghwa Telecom in Taiwan and Hutchison in Hong Kong are already in operation, which are the cards and servers we provide for them.

"Internet Weekly": In terms of 3G, how does Gemplus cooperate with telecom operators in Europe and Japan?

Shi Yuzhi: When 3G was launched in Japan in 2001, Gemplus was the only foreign provider of cards. We first worked with NTT DoCoMo and also with Vodafone. In 2004, Gemplus accounted for a large share of the European 3G market. In total, from 2001 to 2004, Gemplus has provided nearly 40 million 3G cards to the world.

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