Basic telecom service

In the basic telecom service, foreign telecom operators already participated in the basic telecom service market, before China's WTO accession in 2001 and its model was to enter as a strategic investor.

In terms of operation, investing in basic telecom services involves a huge amount of capital and with a clear industry scenario with six main players, foreign investors won't enter blindly.

At present, the top four operators China Mobile, China Unicom, China Telecom, and China Netcom all made overseas IPOs and most of them have foreign strategic investors like Vodafone in China Mobile. This is the best example of foreign involvement in China's basic telecom service market.

Besides, while the opportunity for direct investment into basic service is not mature, some foreign telecom operators chose an indirect way, such as developing large accounts, training, technology testing together with Chinese counterparts. A typical example is the strategic partnership between British Telecom and China Netcom and a joint research centre between France Telecom and China Telecom.

Within the coming years, we can expect to see more heavyweight foreign telecom operators entering the Chinese market and promoting the prosperity of the industry.

Telecom equipment industry

When China joined the WTO, it was also committed to endorsing the Information Technology Agreement, which requires all members to elevate tariffs on information technology products. China has fully complied with that agreement.

Besides, China also lifted requirements on foreign currency exchange, trade balance, local content, and export performance.

Thus in the telecom equipment market, the domestic market is already integrated with the global market, so there is no fundamental difference in operating in this market between domestic and foreign companies.

A landmark event in the opening of this area is the establishment of Shanghai Bell Alcatel, the first foreign-invested telecom equipment company in China and the first one that foreign investors had an absolute majority.

The author is an analyst with the research centre of China Galaxy Securities Co Ltd

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