By Ben Blanchard

BEIJING, Nov 2 (Reuters) Canadian telecom equipment giant Nortel Networks Corp. is looking to increase investment in Asia and will not rule out job cuts in more developed markets as it continues to restructure, its top executive said on Thursday.

''We're not as competitive as we need to be,'' Chief Executive Mike Zafirovski told reporters in Beijing on a visit to open a new research and customer service centre.

''Our costs are not at world class levels -- they will be.

Employment, including a shift from high to low cost countries, will be a part of the answer, but that's a distant to improving processes, including quality.'' In June, Nortel said it would cut 1,100 jobs, or 3.2 percent of its workforce, but said it would create 800 new ones in low-cost countries like Mexico and Turkey.

Over the last year it has also added some 400 new research and development jobs in China.

''There's no specific plans at this time to have any significant shift in employment,'' Zafirovski said, when asked about further job cuts in more expensive places like Canada or Europe.

''Having said that, we've been very public with our statements that Nortel will be a very competitive enterprise, and it's an on-going process. We're evaluating the best way to reconfigure the company to have strong, profitable growth.'' Asia was one area Zafirovski saw providing future growth.

''We want to invest in Asia and we'd love to be twice as big in China two years from where we are today,'' he said, without elaborating.

The company does not break down its China revenues, but second quarter net income in Asia rose almost two-thirds to 9 million, or some 16 percent of the global total.

Nortel, which has struggled in recent years with earnings restatements, shareholder lawsuits and regulatory investigations, is running a detailed review of its operations so that it can focus on areas where it has market share of at least 20 percent.

Zafirovski, who previously worked for Motorola Inc. and General Electric Co., is the latest executive tapped by the company to lead a turnaround.

Nortel has frustrated investors with huge losses and a much reduced stock price since the tech bubble burst in 2000-2001.

A large accounting gain allowed Nortel to report a second-quarter profit in August, but the company said profit margins continued to be squeezed and fell short of its targets.

Zafirovski declined to give any earnings outlook. The company unveils third quarter results on Tuesday.

''Many hard cost actions were taken before I came,'' he said.

''We've taken a number since I've been here, and those things are not going to stop.'' REUTERS DKS DS1234