Doing Business with China

Jonathan Sandbach and Michelle Ye, Cable & Wireless

This chapter has two purposes: firstly to give an overview of the development of the telecommunications services sector in China as it concerns overseas investors. Secondly, it suggests ways in which the sector may develop in future, particularly in terms of its regulatory oversight. We will concentrate on telecommunications service provision rather than telecommunications equipment manufacture.

Overview of China's telecommunications industry

China has six national operators providing a range of telecommunications services from fixed telephone to mobile, and from voice to data. These are China Telecom, China Unicom, China Mobile, China Netcom, China Railcom and China Satellite. China Unicom and China Mobile are public listed companies on the Hong Kong Stock Exchange market and China Telecom is planning its Initial Public Offering (IPO) in New York and Hong Kong in November 2002.

The following key facts give an idea of the magnitude of the Chinese telecommunication services' infrastructure and markets:

• China ranks first in the world in terms of numbers of both fixed and mobile telephone subscriptions, and consequent network capacity;

• China ranks third in the world in terms of the number of Internet users;

• China ranks first in the world in terms of number of mobile subscribers (180 million by September 2002).

On the basis of these facts alone, China would appear to be a market of huge interest to global telecommunications companies, given the opportunity to partner with such strong domestic players. Historically this has been difficult, but China's recent commitment to the WTO is providing some new and significant opportunities and it is to be hoped that further market development will follow.