Ericsson will invest one billion dollars in China over the coming five years, betting on more demand for wireless services in the world's largest mobile phone market.

Ericsson will expand manufacturing capacity, establish more research and development centers and grow its service reach, Ericsson Greater China president Mats Olsson told a company-sponsored seminar in Shanghai.

The investment comes as the company positions itself on the next generation of wireless mobile networks and phones, know as 3G, that would allow for the downloading of video clips and games.

China is expected to issue 3G licenses in early 2006.

Ericsson currently has a 35 percent share in the existing GSM/GPRS market and is the largest supplier to China Mobile.

Ericsson's spokemen said that China was a key growth market and was adding five million mobile subscribers per month, which he expects to pick up as incomes grow outside of the current major subscriber market.