Telecommunications industry

The telecommunications industry in China is monopolized by various state-run businesses: China Telecom and China Netcom in the fixed-line business, China Mobile and China Unicom in the mobile sector, as well as two much smaller companies: China Satcom and China TieTong. As a result of China’s entry to the World Trade Organization (WTO) in 2001, a new regulatory regime is now being established and foreign operators are gradually being allowed to access the market. Although Chinese customers keep complaining that they need to pay higher prices for products and services and receive lower-quality services than customers in America or Europe, foreign travellers often feel that the telcommunication services in China is cheap and convenient.

As China’s 2nd generation of mobile communications equipment market is dominated by European and North American companies and because of the unique characteristics of mobile communications, most of China’s mobile communications equipment demands are filled by imports. The quickly rising Chinese manufacturers, however, led by Huawei Technologies and ZTE are turning to South American, Southeast Asian and African countries for business opportunities and are increasingly raising their market share in China.

In 2005, China’s Ministry of Information Industry (MII), the most important government regulator in the telecommunications industry, projects that Chinese telecom carriers will invest $25 billion to recruit 45 million fixed line telephone subscribers and 58 million cellular phone users. MII expects the number of fixed line telephone users to reach 361 million and the penetration rate to reach 27.6% by the end of 2005 and the number of cellular users to reach 392 million and a penetration rate of 30%. With such an investment, Chinese telecom carriers expect to generate revenues of USD 76.5 billion, 10.4% more than that in 2004.