Opening Telecom sector wider

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Last updated at: (Beijing Time) Thursday, January 08, 2004

Opening Telecom sector wider

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Observing its commitment to World Trade Organization (WTO) rules, a top information technology official vowed yesterday to attract more telecom-related operators as well as equipment and services providers to invest in the world's most populous market.

"We will stick to our commitment to the WTO and make our policies more optimized and transparent," said Wang Xudong, minister of the Information Industry, at a two-day annual working conference in Beijing.

The ministry is to improve communication on policy and regulation announcements and consultations, he said.

"We will keep a close eye on the appraisal of our commitment by the WTO so as to optimize the market economy rules in the domestic market," Wang emphasized.

Lured by the lucrative market, overseas telecom players, such as SK Telecom, Vodafone, AT&T, HK's PCCW and Hutchison Whampoa, have shown increasing enthusiasm on participating in the Chinese telecom market.

SK Telecom, for example, inked a co-operation pact with China Unicom last year to provide telecom value-added service for China's CDMA subscribers.

"All the procedures are underway and the JV is likely to be officially announced soon," said an official with China Unicom.

"We believe telecom services such as wireless data and multiple media will see an explosive increase this year," said John Liu, chief executive officer of SK Telecom (China).

He expected the Chinese telecom consumption market to become more mature this year.

With the gradual lift of restrictions for foreign participation, overseas penetration in the telecom industry is to be sped up this year, said Chen Jinqiao, director of the China Academy of Telecommunications Research under the Ministry of Information Industry (MII).

"However, a more sound environment characterized by transparent policies and a good legal environment should be hammered out to attract more foreign investment," he urged.

He pointed out that telecom value-added service right now is not very attractive to those big telecom operators as it is still a tiny market in China.

"I believe many foreign telecom players are adopting a wait-and-see attitude towards the domestic telecom market at the moment while considering their strategies," he said.

The world telecom market is just bottoming out and the worldwide investment in the sector is likely to witness a "high tide" in the latter half of the year, he predicted.

"The favourable momentum is conducive to expanding exports, attracting more foreign investment, going public overseas and seeking overseas expansions," Wang said yesterday.

He estimated that the country's IT industry fulfilled an added-value of 709 billion yuan (US$85.4 billion) last year, accounting for 6 per cent of the gross domestic products.

According to him, the number of telephone subscribers, the telendensity, sales of electronic and information products and exports of electronic products achieved their target outlined by the "10th Five-Year Plan (2001-05) by the end of last year, two years ahead of time.

He also highlighted the target of accomplishing an added-value of 885 billion yuan (US$106.6 billion) this year.

"The boom last year was mainly brought up because of a sound national economy, favourable government policies as well as telecom operators' promotion activities," said Gao Shiji, deputy director of the National Development and Reform Commission's Institute of Economic Systems and Management.

"However, we should not be overoptimistic about those achievements," he warned.

"Substantial improvement in market supervision should be rolled out quickly to sustain the growth," he said.

He also called for market access for telecom equipment and proposed that operations be further opened.

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