MII Official: Domestic Telecom Equipment
Makers To Boost China Market Share Despite
WTO Entry
By Steve Rasin
ChinaOnline News
(17 May 2000) Local market share for domestic producers of
telecom equipment will increase over the next three years,
even after China enters the World Trade Organization (WT0),
a Ministry of Information Industry (MII) official told attendees
at the May 16 China Telecom 2000: "China at a Crossroads"
conference.
Held in Washington DC, the event took place on the eve of
U.S. Congress? vote on permanent Normal Trade Relations
(PNTR) for China, scheduled next week.
Without detailing what lay behind his forecasts, Mr. Lei
Zhenzhou, of the Ministry of Information Industry?s China
Academy of Telecommunications Research, said the market
share for local manufacturers of mobile switching equipment
would be 40 percent in 2001, rising to 70 percent by 2003; for
base stations, 25 percent in 2001, rising to 50 percent by
2003; for handsets, 10 percent to 15 percent in 2001, rising
to 30 percent by 2003.
"Government policies encourage local production and
competition," he said.
Lei summed up the Chinese attitude toward the dangers and
advantages of WTO accession.
"On the positive side, WTO accession will bring more
investment, technology and improved management to China.
On the negative side, local producers will be forced to cut
prices and margins while more revenues and profits will go
into (foreign) pockets," he said.
China?s accession to the World Trade Organization (WTO)
and the opportunities in its rapidly growing
telecommunications equipment and service markets were the
themes on the first day of the conference.
Sponsored by SoftMedia Consulting Group and voice portal
technology solution provider Kinera, the conference brought
together Chinese telecommunications and embassy officials,
U.S. government representatives and industry executives.
China To Be No.2 Mobile Phone Market
"By the end of 2000, China will be the world?s second largest
market for mobile phones, second only to the U.S. By 2010
there will be 250 million wireless subscribers," said Christine
Keck, Director, Asia Pacific Programs at the Technology
Industry Association or TIA.
"PNTR is essential if the U.S. wants to stay ahead of its
competitors in this booming market,"
she said.
Most panelists focused on broad-brush developments in the
telecommunications and Internet industries in China and
agreed that joining the WTO was going to be good for
business in this area as well as for China in general.
Delays In Implementing CDMA
One presentation was expected to have included discussion
of the specific issue of the future of Qualcomm?s CDMA
technology in China, a focus of some interest as local
telecommunications provider Unicom was supposed to have
begun deployment of Code Division Multiple Access in test
markets by now.
Dr. Hu Qingdong, of Unicom?s Technology Department, was
unable to shed much light on the status of the licenses,
however. "GSM will be Unicom?s main focus in attracting and
serving customers. As a government company, Unicom
follows government guidelines. CDMA development is still
ongoing, however."
Professor Zhu Qiliang, Director General of the Beijing
University of Posts and Telecommunications Telecom R&D
Center, said in a technical presentation on the evolution to
third generation (3G) wireless networks that there were
several reasons for the delays in implementing CDMA.
There is no need for China to adopt narrow band CDMA now
because there are faster ways to meet the demand for
broadband and WAP applications by extending the existing
GSM networks, Zhu told ChinaOnline. 3G networks, which
will use broadband CDMA, will not be available until at least
2003, he added.
Professor Zhu said in his presentation that three factors will
determine when China introduces 3G technologies: demand
for mobile multimedia services, which is not expected to
increase noticeably until 2005; the growing 2G spectrum
shortage (the 900 MHz TACS and GSM frequency bands are
extremely limited in cities); and increased competition
among operators hoping to offer the more advanced services,
quality and efficiency of 3G.
Paul Kullman, Commercial Attache at the U.S. Embassy in
Beijing, drove home the point that China?s accession to the
WTO was good for both the United States and China, and
enumerated several ways in which Beijing was preparing to
compete in a business atmosphere more open to free trade.
China is creating a "transparent telecom licensing system
and interconnection regulations," will release interim telecom
market regulations by the second half of 2000 and is in the
process of drafting a Telecommunications Act, he said.
To strengthen local producers during the phase-in period
under WTO, Beijing will continue to promote the "buy local"
policy, increase financial support to key companies, stop
cut-throat competition and end local protectionism, said
Kullman, who follows the telecommunications industry at the
embassy.
"In the next three years China?s telecommunications
transmission, access and hardware investments will amount
to $24 billion and focus primarily on improving consumer
access," he predicted.
Panelists agreed that China?s accession to the WTO did not
mean that local manufacturers would necessarily be
overwhelmed by larger international competitors. Kullman
cited several local manufacturers and singled out Huawei
Technology Company as "particularly impressive."
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