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To: jmhollen who wrote (2985)	2/15/1999 12:23:00 AM
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Talk about "..HOT.." news; check out the price: ********************************************** See: buscom.com ********************************************** G-188 TELECOMMUNICATION MARKET OPPORTUNITIES IN CHINA $2,650.00 for full report -------------------------------------------------------------------------------- JIANGUO LIU PROJECT ANALYST INTRODUCTION STUDY GOALS AND OBJECTIVES China's telecommunications market has expanded at a remarkable rate since the 1980s. Sharply increased demand for telecommunications services has put serious pressures on the current telecommunications supply system controlled by the Chinese government. Demand has increased so greatly that suppliers of telecommunications services of China have had to depend on charging subscribers high prices to keep the balance between the demand and service supply. In the past 10 years, the Chinese government has invested substantially in telecomunications infrastructure projects. The supply of telecommunications services still lags considerably behind the fast-growing demands. Nevertheless, this is just the beginning of the development of China's telecommunications market. According to the statistics, China's telecommunications market is one of the most backward markets in the world. For example, by the end of 1994, the number of telephones per 100 persons in China was only 3.2. If the development goal set by the Chinese government can be reached by the end of this century, China will still only have eight telephones per 100 persons, which is significantly behind the average level of current world (15 telephones per 100 persons), and will barely catch up with the current average level for Africa. Obviously, in the next 5 to 10 years, the demand for telecommunications services will increase even faster than at present. If the Chinese government does not change its current management practices in telecommunications, the gap between the highly expanded demand and the limited telecommunications services supply will be enlarged. From a concern about the further development of this market, the author has undertaken a series of studies and surveys. The purpose of this project is to help those who are interested in China's telecommunications business understand the new developments happening in China, and to forecast the development of the market by the end of this century. SCOPE AND FORMAT This study is basically an analysis of datasets and related information about China's telecommunications market. These datasets and information are collected from China's publications and the Chinese government departments, and include material collected from interviews and tele-interviews with some high ranking Chinese officials. This study is divided into the following parts: TRENDS: Introduction to the development of China's telecommunications market from the 1950s to the 1990s. Three development stages are analyzed: the period before the 1980s; the expansion period from 1980 to 1990; and the period of the development and acceleration since 1990. MARKETS: Introduction to China's telecommunications market by provinces and areas, and by products. COMPANIES: Introduction to the suppliers of telecommunications facilities in China's telecommunications market. ANALYSIS AND FORECASTING: Analysis of the indicators of China's telecommunications market and forecasting the further development of China's telecommunications by the year 2000. THE GOVERNMENT'S CONTROL OVER THE TELECOMMUNICATIONS MARKET AND THE REFORM: Introduction to the Chinese government's management system for telecommunications, and analysis of the possibility of reform and opening the market. Before 1980, China's telecommunications market was stagnant. In the 30 years from 1950 to 1980, for example, the number of telephones per 100 persons in the 1950s was lower than 0.2, in 1980 was 0.43, which increased less than 0.25. After 1980, with the development of economic reform, the telecommunications market began to grow very rapidly. From 1980 to 1990, for example, the number of telephones per 100 persons doubled. At the same time, the number of telephone subscribers almost doubled. The average annual growth rate of subscribers was more than 20 percent. Since 1990, the development was accelerated. For example, the telephone subscribers increased by 22 millions; the average annual growth rate has been more than 30 percent. This study also forecasts the market development by the year 2000. If the Chinese government has sufficient funds to invest in the market, the number of telephones per 100 persons can be expected to reach 14 by the year 2000. However, financial problems may delay development. Another problem is the monopoly which controls the telecommunications market of China. The monopoly belongs, of course, to the state-owned enterprises and ultimately to the government. This monopoly promises to be the major obstruction limiting the development of China's telecommunications market. This study analyzes this management system and discusses the possibility of changing the current market management system. METHODOLOGY The research of this study includes extensive interviews and telephone interviews with officials and researchers in China, some of whom are high ranking officials in the Chinese government, i.e., in the SPC (State Planning Commission). The information collected from these surveys is firsthand material which may not be available in current publications. Some secondary sources include the Statistical Survey Reports and Statistical Yearbook of China, as well as Chinese newspapers and magazines. This study uses statistical analysis methods such as simulation and modeling. It also implemented time series models such as the ARMA and the ARIMA models. Regression methods such as least squares are the basic tools for the statistical analysis in this study. CONTRIBUTION OF THIS STUDY This study describes the recent development of China's telecommunications market and points to opportunities therein, which may be useful to those who are interested in the telecommunications business. China's telecommunications market may be the largest one in the world and is expanding with increasing acceleration. This study analyzes its fast development and points to some major elements which have affected its expansion, as well as elements which may determine its further development. The Chinese government's system of control over the telecommunications market is one of the major elements affecting that market. Currently, the monopoly status of government agents and state-owned enterprises is seriously obstructing the expansion of telecommunications services. The study analyzes the government's telecom-munications' management system and the structure of functional departments, which may help people to understand China's macro telecommunications' market management. China has established the development of the telecommunications industry as an important goal. This study introduces this development plan and analyzes its reality. The conclusion is optimistic. Moreover, this study also points out the limitations of this development plan. This study hazards some forecasts for China's telecommunications market development. Compared to what can be expected, the current expansion is only a small beginning. BCC ON-LINE SERVICES INTERNET Now you can locate the hard-to-find information you need on the Internet's World Wide Web. By directing your browser to Business Communications Co.'s new "home page" you will be able to: Examine our complete catalog of Business Opportunity Reports and order directly from BCC. Subscribe to any of our more than 20 monthly technology/marketing newsletters. Read announcements of recently published reports and newly launched newsletters. Register for BCC's well-known conferences. Request additional information about any BCC product. Take advantage of special offers. To reach this important new information resource, go to http/www.buscom.com TO ASSIST YOU FURTHER, WE NOW OFFER THE FOLLOWING OPTIONS: PURCHASE PORTIONS OF THIS REPORT OR CHAPTERS ELECTRONICALLY NOW \|\| CLICK HERE \|\| PURCHASE FULL PRINTED REPORT NOW SEARCH FOR ANOTHER REPORT -------------------------------------------------------------------------------- TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xiv STUDY OBJECTIVES. . . . . . . . . . . . . . . . . . . . . . . . . .xiv SCOPE AND FORMAT. . . . . . . . . . . . . . . . . . . . . . . . . .xiv METHODOLOGY. . . . . . . . . . . . . . . . . . . . . . . . . .xvi CONTRIBUTION OF THIS STUDY. . . . . . . . . . . . . . . . . . . . .xvi BCC ON-LINE SERVICES. . . . . . . . . . . . . . . . . . . . . . . xvii INTERNET . . . . . . . . . . . . . . . . . . . . . . . . . . xvii DIRECT ACCESS. . . . . . . . . . . . . . . . . . . . . . . . xvii SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xviii OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 DEVELOPMENT STAGES OF CHINA'S TELECOMMUNICA- TIONS MARKET . . . . . . . . . . . . . . . . . . . . . . . . . .1 TELECOMMUNICATIONS INFRASTRUCTURE . . . . . . . . . . . . . . . . . .1 CHINA'S TELECOMMUNICATIONS FACILITIES IN ASIA . . . . . . . . . . . .5 SPENDING FOR TELECOMMUNICATIONS DEVELOPMENT . . . . . . . . . . . . .5 MARKET CONTROL SYSTEM AND REFORM. . . . . . . . . . . . . . . . . . .7 TRENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 FACTORS AFFECTING CHINA'S TELECOMMUNICATIONS MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 STRUCTURE OF ECONOMY . . . . . . . . . . . . . . . . . . . . . .9 TECHNOLOGIES . . . . . . . . . . . . . . . . . . . . . . . . . .9 FINANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 TELECOMMUNICATIONS MARKET MANAGEMENT SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 LAW AND REGULATIONS. . . . . . . . . . . . . . . . . . . . . . 10 POLITICAL ISSUES . . . . . . . . . . . . . . . . . . . . . . . 10 TELECOMMUNICATIONS MARKET INDICATORS. . . . . . . . . . . . . . . . 11 THE NUMBER OF TELEPHONES PER 100 PERSONS . . . . . . . . . . . 11 THE NUMBER OF LONG-DISTANCE TELEPHONE CALLS. . . . . . . . . . 11 THE NUMBER OF TELEPHONE SUBSCRIBERS. . . . . . . . . . . . . . 11 THE NUMBER OF LONG-DISTANCE TELEPHONE LINES. . . . . . . . . . 12 THE SWITCHBOARD CAPACITY . . . . . . . . . . . . . . . . . . . 12 THE DEVELOPMENT OF CHINA'S TELECOMMUNICATIONS MARKET IN CHINA BEFORE 1980 . . . . . . . . . . . . . . . . . . . 12 THE NUMBER OF TELEPHONES PER 100 PERSONS . . . . . . . . . . . 12 THE NUMBER OF SUBSCRIBERS. . . . . . . . . . . . . . . . . . . 14 THE NUMBER OF LONG-DISTANCE TELEPHONE CALLS. . . . . . . . . . 17 THE NUMBER OF TELEPHONE LINES. . . . . . . . . . . . . . . . . 17 OTHER INDICATORS OF TELECOMMUNICATIONS . . . . . . . . . . . . 21 The Number of Fax Machines . . . . . . . . . . . . . . 21 The Number of Telegraph Lines . . . . . . . . . . . . . . 21 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 21 TELECOMMUNICATIONS MARKET DEVELOPMENT IN CHINA FROM 1980 TO 1990 . . . . . . . . . . . . . . . . . . . . . 23 OVERVIEW OF THE TELECOMMUNICATIONS MARKET DURING THE 1980s . . . . . . . . . . . . . . . . . . . . . . 23 Fast Expansion of the Demand for Telecommunications Services . . . . . . . . . . . . . . 23 The Supply of Telecommunications Services Increased Very Quickly. . . . . . . . . . . . . . . . . 23 The Gap Between Supply and Demand in Telecommunications Services Enlarged. . . . . . . . . . 23 The Chinese Government Increased Investment in Telecommunications. . . . . . . . . . . . 23 Foreign Investors Started to Enter China's Telecommunications Market . . . . . . . . . . . . . . . 24 FAST EXPANSION OF TELECOMMUNICATIONS MARKET DURING THE 1980s . . . . . . . . . . . . . . . . . . . . . . 24 Long-distance Telephone Calls . . . . . . . . . . . . . . 24 The Number of Telephone Subscribers . . . . . . . . . . . 25 The Number of Long-distance Telephone Lines . . . . . . . 27 Switchboard Capacity. . . . . . . . . . . . . . . . . . . 30 GOVERNMENT INVESTMENT IN THE TELECOMMUNICATIONS MARKET. . . . . . . . . . . . . . . . . . 32 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ACCELERATION OF THE DEVELOPMENT OF CHINA'S TELECOMMUNICATIONS MARKET SINCE 1990. . . . . . . . . . . . . . . 35 THE NUMBER OF LONG-DISTANCE TELEPHONE CALLS SINCE 1990 . . . . . . . . . . . . . . . . . . . . . . . . . 35 THE NUMBER OF TELEPHONE SUBSCRIBERS SINCE 1990 . . . . . . . . . . . . . . . . . . . . . . . . . 36 THE NUMBER OF LONG-DISTANCE TELEPHONE LINES SINCE 1990 . . . . . . . . . . . . . . . . . . . . . . 37 THE INCREASE IN SWITCHBOARD CAPACITY SINCE 1990 . . . . . . . . . . . . . . . . . . . . . . . . . 39 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 42 MARKETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 TELECOMMUNICATIONS MARKET BY PROVINCES. . . . . . . . . . . . . . . 43 OVERVIEW OF CHINA'S PROVINCES. . . . . . . . . . . . . . . . . 43 TELEPHONE SUBSCRIBERS AMONG DIFFERENT PROVINCES. . . . . . . . . . . . . . . . . . . . . . . . . . 44 LONG-DISTANCE TELEPHONE CALLS IN DIFFERENT PROVINCES . . . . . . . . . . . . . . . . . . . . . . . . . 47 TELECOMMUNICATIONS MARKET IN PROVINCES . . . . . . . . . . . . 49 LONG DISTANCE TELEPHONE LINES IN DIFFERENT PROVINCES. . . . . . . . . . . . . . . . . . . . . . . . . . 50 SWITCHBOARD CAPACITY IN DIFFERENT PROVINCES. . . . . . . . . . 51 THE NUMBER OF TELEPHONES IN DIFFERENT PROVINCES. . . . . . . . . . . . . . . . . . . . . . . . . . 53 DISTRIBUTION OF TELECOMMUNICATIONS FACILITIES. . . . . . . . . 54 TELECOMMUNICATIONS MARKETS BY PRODUCTS. . . . . . . . . . . . . . . 56 CHINA'S TELEPHONE MARKET . . . . . . . . . . . . . . . . . . . 56 CENTRAL OFFICE SWITCH. . . . . . . . . . . . . . . . . . . . . 56 OPTICAL FIBER EQUIPMENT AND CABLES . . . . . . . . . . . . . . 57 CHARACTERISTICS OF THE TELECOMMUNICATIONS MARKET. . . . . . . . . . 57 THE TELECOMMUNICATIONS MARKET IN URBAN AREAS GREW UP MORE QUICKLY THAN THAT IN RURAL AREAS . . . . . . . . . . . . . . . . . . . . . . . 57 THE DEMAND FOR TELECOMMUNICATIONS SERVICES GREW MORE QUICKLY THAN THE SUPPLY. . . . . . . . . . . . . . 61 THE TELECOMMUNICATIONS MARKET IN EASTERN AREA AND CENTRAL/SOUTHERN AREA OF CHINA EXPANDED MORE QUICKLY THAN OTHER AREAS . . . . . . . . . . . 61 INFRASTRUCTURE PROJECTS OF CHINA'S TELECOMMUNICATIONS SINCE 1990 . . . . . . . . . . . . . . . . . . 67 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 67 OPTICAL FIBER TRANSMISSION TRUNK LINES . . . . . . . . . . . . 68 GROUND SATELLITE STATIONS. . . . . . . . . . . . . . . . . . . 70 RENEWAL OF TELECOMMUNICATIONS FACILITIES IN PROVINCIAL CAPITAL CITIES . . . . . . . . . . . . . . . . 71 INVESTMENT SPENDING. . . . . . . . . . . . . . . . . . . . . . 73 FOREIGN INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . 75 SEEKING MORE FOREIGN INVESTMENT AND THE ESTABLISHMENT OF CHINA UNICOM. . . . . . . . . . . . . . 78 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 79 COMPANIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 THE STRUCTURE OF CHINA'S TELECOMMUNICATIONS INDUSTRY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 MAJOR PRODUCERS OF TELECOMMUNICATIONS FACILITIES. . . . . . . . . . 80 CENTRAL OFFICE SWITCH. . . . . . . . . . . . . . . . . . . . . 80 China National Postal and Telecommunications Appliance Corp. (PTAC) . . . . . . . . . . . . . . . . 80 China Post and Telecommunications Industry Corporation (PTIC). . . . . . . . . . . . . . . . . . . 82 Wuhan Research Institute of Posts and Telecommunications (WRIPT). . . . . . . . . . . . . . . 82 Shenzhen Huawei Technology Co., Ltd.. . . . . . . . . . . 82 Exicom International. . . . . . . . . . . . . . . . . . . 82 Beijing Synlead Technology Development Co.. . . . . . . . 82 Beijing B.C. Group Co.. . . . . . . . . . . . . . . . . . 83 Alcater China Inc.. . . . . . . . . . . . . . . . . . . . 83 TELEPHONES . . . . . . . . . . . . . . . . . . . . . . . . . . 83 OPTICAL FIBER. . . . . . . . . . . . . . . . . . . . . . . . . 85 China National Postal and Telecommunications Appliance Corp. (PTAC). . . . . . . . . . . . . . . . . 85 Wuhan Research Institute of Posts and Telecommunications (WRIPT). . . . . . . . . . . . . . . 85 Shinmei Electric Co. Ltd. . . . . . . . . . . . . . . . . 86 ANALYSIS AND FORECASTING . . . . . . . . . . . . . . . . . . . . . . . . 87 TELECOMMUNICATIONS MARKET INDICATORS AND DATA ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . 87 THE NUMBER OF TELEPHONES PER 100 PERSONS . . . . . . . . . . . 87 The Growth Rate of the Number of Telephones per 100 Persons . . . . . . . . . . . . . . . . . . . . . . 89 THE DIFFERENCE BETWEEN URBAN AREAS AND RURAL AREAS. . . . . . . . . . . . . . . . . . . . . . . . . 92 THE NUMBER OF TELEPHONE SUBSCRIBERS. . . . . . . . . . . . . . 95 Urban Telephone Subscribers . . . . . . . . . . . . . . . 95 The Number of Telephone Subscribers in Rural Areas . . . . . . . . . . . . . . . . . . . . . . . . . 97 Other Telephone Subscribers . . . . . . . . . . . . . . .101 Wireless Telephone Subscribers . . . . . . . . . . .101 Long-distance DD Telephone Subscribers . . . . . . .101 Mobile Telephones Subscribers. . . . . . . . . . . .101 CHINA'S TOTAL NUMBER OF LONG-DISTANCE TELEPHONE CALLS . . . . . . . . . . . . . . . . . . . . . . . . . .104 The Number of Long-distance Telephone Calls . . . . . . .104 International Long-distance Telephone Calls . . . . . . .106 TELEPHONE LINES AND SWITCHBOARD CAPACITY . . . . . . . . . . .109 Long-distance Telephone Lines . . . . . . . . . . . . . .109 Switchboard Capacity. . . . . . . . . . . . . . . . . . .112 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . .114 TELECOMMUNICATIONS DEVELOPMENT PLAN . . . . . . . . . . . . . . . .115 THE CHINESE GOVERNMENT'S GOALS AND PLAN FOR THE DEVELOPMENT OF THE TELECOMMUNICATIONS MARKET. . . . . . . . . . . . . . . . . .115 Goals of China's Telecommunications Development . . . . .115 The Telecommunications Development Plan . . . . . . . . .116 SPENDING AND SOURCES OF FUNDS. . . . . . . . . . . . . . . . .116 Spending. . . . . . . . . . . . . . . . . . . . . . . . .116 Sources of Funds for Telecommunications Infrastructure Projects. . . . . . . . . . . . . . . . . . . . . . . .118 Revenues from Telecommunications Operations . . . . . . .119 Revenue from Telecommunications Services Since 1990 . . . . . . . . . . . . . . . . . . . .119 Charges on Telecommunications Services . . . . . . .121 Revenue from International Long-distance Calls. . . . . . . . . . . . . . . . . . . . . . .122 FORECASTING . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 THE EXPECTED NUMBER OF TELEPHONES PER 100 PERSONS BY THE YEAR 2000 . . . . . . . . . . . . . . . . . .123 THE NUMBER OF LONG-DISTANCE TELEPHONE CALLS BY THE YEAR 2000 . . . . . . . . . . . . . . . . . . . . . .125 THE NUMBER OF TELEPHONE SUBSCRIBERS THROUGH THE YEAR 2000. . . . . . . . . . . . . . . . . . . .126 THE NUMBER OF LONG-DISTANCE TELEPHONE LINES BY THE YEAR 2000 . . . . . . . . . . . . . . . . . . . . . .130 DEVELOPMENT OF SWITCHBOARD CAPACITY BY THE YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . .132 SOURCES OF TELECOMMUNICATIONS DEVELOPMENT PROJECTS . . . . . . . . . . . . . . . . . . . .134 The Revenue of Telecommunications Business by the Year 2000 . . . . . . . . . . . . . . . . . . . . . . .134 Telephone Installation Fee. . . . . . . . . . . . . . . .135 Foreign Investment in China's Telecommunications. . . . .136 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .137