From dark ages to technology's cutting edge
2001-04-14
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In the second part of a series, Simon Cartledge looks at the changes telecommunications have brought to commerce and industry in China
A decade ago, to talk about China's national economy was seriously misleading. It was really a series of regional - often no bigger than provincial - economies, which traded little with each other, let alone the outside world.
Everywhere had its own set of factories producing a similar set of goods - hence the hundreds of car and truck factories, steel mills, cement works, glass works and so on across the country.
The biggest reason for this was the lack of transport infrastructure. Even today, China has fewer miles of railway than the United States had at the time of its civil war in the 1860s. And the country is still basically a set of regional economies - in the South, around Guangdong; in the East, around Shanghai; in the North, along the Beijing-Tianjin access; and in the northeast.
But national markets are emerging, thanks partly to the rise of transport infrastructure - which has improved markedly thanks to the ongoing construction of a national highway network - but even more because of the rise of communications technology, and with it the ability to reach out to markets way beyond the factory doorstep.
One of the biggest national markets is in communications itself.
Last year, China's main three telecom operators, China Mobile, China Telecom and China Unicom, had a combined revenue of US$ 37 billion (HK$ 288.6 billion).
As a recent article by the China Economic Quarterly, pointed out, this is far more than the country spends on pharmaceuticals, whose sales amounted to US$ 23.5 billion last year, and way ahead of car sales, which earned perhaps US$ 9 billion.
Indeed, serving the mobile part of this telecoms market is the only industry in China where foreign companies can justifiably claim to have realised their hopes of tapping into the market potential they claim to have seen in its huge population.
For Sweden's Ericsson, China is its biggest single market worldwide, while for both Finland's Nokia and the US's Motorola it is their second biggest market.
But the impact of the growth in communications technology is far greater than simply in creating a market of people talking to each other. It has allowed huge swathes of Chinese industry to enter the modern era.
The most significant of these are various service industries which 10 years ago either did not exist or were tiny, but which are now driving the creation of national markets.
Advertising existed. But it was crude, and there was little in the way of the various marketing-related support industries.
Take branding. At the start of the 1990s, China had one national brand, Tsingtao beer, and that was principally known as an export brand.
Foreign companies undoubtedly led the way, Coca-Cola being one of the first examples. But local ones have followed, most notably the various consumer electronics and white goods makers which have established themselves as household names in China: Haier, Kelon, Changhong and Konka among them.
These companies sprang from nowhere in the 1990s, not because they suddenly discovered the secret of cheap manufacturing but because they could promote themselves nationally.
On top of this, they took on board the importance of providing after-sales service and support - based on customers being able to reach and contact them in a way that would have been impossible in the 1980s.
Of course, for these companies to establish themselves depended mainly on them using traditional mass media means of advertising. But this will change. The Internet will be central to this due to the ability it gives people to track down information.
But in China it will not always be information received over a personal computer plugged into a phone line. In fact, if China's mobile phone users rise to number 250 million or so by 2004 or 2005 as some telecommunications specialists have predicted, more people will have their first experience of the Internet from their mobile phone rather than from a computer.
Already, China has pioneered some areas of mobile commerce. Shanghai was the first place worldwide - in 1998 - where shares were purchased over a mobile -phone based system.
Others will access the Internet through their television. One under -appreciated fact is that every new housing block which goes up in China is required to have a fibre optic cable running into the building - and most of them do.
This means that the majority of the urban population will have broadband access to their home of a standard far superior to that in Europe or North America.
No doubt the reality will not live up to the hype, but thanks to the technology already in place, companies are emerging that can, and do, treat China as one market.
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