Telcos see hope in China's open markets
news.com
By Reuters
Special to CNET News.com
March 16, 1999, 10:00 a.m. PT
BEIJING--Premier Zhu Rongji's signal that China may
open its telecommunications market has raised the
spirits of foreign firms worried about the fate of $1.4
billion in investments, executives said today.
Zhu said yesterday he was "very hopeful" of a deal for
China's entry into the World Trade Organization, and
dangled the prospect of greater foreign access to
telecommunications.
The words raised eyebrows at several of the foreign firms
that have put money into so-called China-China-foreign
ventures, known as CCFs, which China has declared
"irregular."
The foreign firms, barred from direct involvement in the
world's fastest growing telecom market, found Chinese
partners which would establish joint ventures with China
Unicom, the cash-starved competitor to state giant China
Telecom.
The overseas companies would make money from
installing telephone systems and consulting fees.
China's Ministry of Information Industries declared them
irregular late last year and has said it would settle the
ventures "one by one."
But so far, the foreign companies say they have heard no
word on the fate of their investments.
While there was little hope
the CCF model could be
salvaged, one executive said
an acceptable solution would
be to allow foreigners to buy
minority stakes in Chinese
service providers.
"They're considering this
issue together with the WTO
accession," said the
executive, who declined to be
identified.
"That's the reason we're looking forward to whatever
progress he's going to make in the U.S. visit," he said of
Zhu's scheduled visit to the United States next month.
Although the United States and China agree there remains
much to be done on a WTO deal, both have said in recent
weeks there has been significant progress and there is
growing speculation that some kind of announcement
could come while Zhu is in the United States.
"China will make the biggest concession within its ability,"
Zhu told a news conference.
"We would open up China's telecommunications market to
let foreign capital come in," he said. "The way forward is to
bring in competition."
Another executive said Zhu's comments were "a very
positive message," but said the foreign companies were
exasperated at waiting for a solution to the CCF problem
and that their patience was running thin.
"What we'd like to see is action for a change. It's
ridiculous," he said.
Already several companies, such as GTE, have scaled
down their China offices after attempts to break into the
market were repeatedly frustrated.
Analysts say the only thing keeping the others around is
the fate of their CCF investments.
"We'll be waiting at a maximum to the end of this year,"
said one of the executives.
"If WTO is going dead again, you're going to see a big
exodus," he said. "Lots of people will be leaving."
Story Copyright © 1999 Reuters Limited. All rights
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