China Netcom, China's second largest fixed-line telephone company, will on Thursday open a London office that will be its European headquarters.

China Netcom is looking to use its global telecoms network to serve the voice and data needs of Chinese companies with operations in Europe, said one person familiar with the situation. It also wants to serve the telecoms needs of European companies with operations in China.

The move by China Netcom is part of efforts by Chinese companies to expand overseas under the Chinese government's "go global" policy. The government wants to ensure that Chinese companies can compete with US, Japanese and European companies.

China Netcom's telecoms network extends to cities in Asia, Europe and the US, and it is looking to expand it further, said the person familiar with the company's plans.

The London office will be opened by Jidong Zhao, China Netcom's senior vice-president.

Its efforts to serve the voice and data needs of multinationals will pit it against European and US telecoms companies such as BT, AT&T and Verizon Communications.

China Netcom is not the first Chinese telecoms company to open a London office. China Telecom, China's largest fixed-line company, opened a London office in 2005. Like China Netcom, China Telecom is looking to serve the telecoms needs of Chinese companies with operations in Europe.

Huawei and ZTE, the increasingly powerful Chinese telecoms equipment makers, opened London offices in 2002 and 2004. They were initially sales offices but now also focus on financing.

Telefnica, the Spanish telecoms company with a leading presence in Latin America, on Tuesday said it hoped to increase its minority stake in China Netcom to 10 per cent by the end of the year. Vodafone, the UK mobile phone group, has a 3 per cent stake in China Mobile, China's largest mobile operator, which plans to open a London office early next year.