Analysis of the telecommunications industry in China

Analysis of the telecommunications industry in brinyland mainland mainland ChinaVodafone is a London-based major(ip) telecommunication tight employing everywhere 84,000 employees worldwide as of 2010. They are in more than than 20 countries and go through to uniting in another 40 more for descend revenue in 2010 of 44 meg.1There revolve nearly is on RD and license counseling which make Vodafone a attractor in new technology and product development. With this reputation, a lot of local companies whoremonger be interested in partnership with Vodafone in exhibition to net a technical boost which can help them overtake on the local competition.In 2000, Vodafone added CMHK (China Mobile Hong Kong) to his partner list by acquire 2.19% of the familiarity shares at a price of $2.5 billion. Two years later onwards a second purchase of $750 million increased their share to 3.2%. By creating this partnership, Vodafone gained access to over 477 million subscribers in Hong Kon g and China. From CMHK side, the alliance with the British firm circumstances the table for a technological innovation campaign. The inaugural curious output of this collaboration was JIL (Joint Innovation Lab), with the goal of accelerating the innovation process.2China and the WTO-How has Chinas initiation into the WTO affected Vodafones development in China and Hong Kong?-How has it affected overseas telecommunications in general? CUsersMYDocuments2011-1china telecom statistics.jpg afterward almost 15 years of negotiation, China joined WTO as of 11 December 2001. beforehand the adhesion, Chinas policy protected the national emerging telecom industries3while allowing solitary(prenominal) exotic equipment vendors to invest in Chinas economy.4The new contract gave entry to foreign investment for up to 49% of one of the local companys share in the 17 largest cities in China.5As well as other securities industrys, Chinas telecommunication market is expected to grow very rapidl y especially if unresolved to foreign service suppliers. The whole market generated over $130 billion in 2010 and is expected to grow by an average rate of 8.8% in for the next five years. Thus overtaking Japan and becoming the leader in the Asian market.6For foreign investors, those odds were quite attracting.The Reality-Why has Vodafone tacit held a minority stake in CMHK?-What factors do you think gift inhibited Vodafones investment in the Chinese telecommunications market?Still, even after the entry in the WTO, Chinas telecommunication market stayed under the large bend of the Ministry of Information Industry (MII). The maximum level of stake ownership was set up to 49% under WTO agreement but no foreign telecommunication companies got close to that number. Vodafone, for example, was planning to increase its share up to 20% by 2005 in 2009 the 3.2% was still the reality.The main problem in the Chinese market is a multitude of complex and multi-layered political, economic and cultural factors.7China is still operated with ancient art of Guanxi ( electronic network of contacts)8and MII is considered to be both regulator and political party in Chinese telecommunication market. So even if the contract allows many expansion for foreign companies, the huge bureaucracy makes investing in China a long and laborious process.China Unicom and SK telecommunication-What has China Unicom do in its attempt to remain competitive? What are the advantages and challenges of such a strategy, and how effective do you think it will be?In 2006, a fewer years after the entry of Vodafone in the Chinese market, SK Telecom of South Korea invested $1 billion in China Unicom. In total the South Korean firm received about 7% of the company shares in return of this investment.The great advantage for the Chinese giant was a possibility for a technological advancement. The two firms would right off work in concert on handset development and IP sharing. China Unicom could then hav e a glance at foreign technology, just like their main competitor did 6 years ago with Vodafone. For SK Telecom, the transaction was also a great advancement. It allowed them to gain entry in the protected Chinese market and escape the South Korean saturated market.On the other hand, as part of the contract, China Telecom had to accept SK Telecom as the repair partner until the end of 2007.9In technology business, one year and a half tied to only one partner could hold you backward. other foreign company could release a great new technological advancement and it would be impossible for China Unicom to get their hands on it.The Third Giant China Telecom-What actions do you think China Telecom should take, given the competitive position of the CMHK-Vodafone and China Unicom-SK Telecom partnership?The telecommunication market in China has been quite homogeneous so far. Looking for foreign partnership could be a way to get a hand on advanced technology or management system that would give the firm a competitive advantage over their competitors, especially since the two other leading companies already stepped forward by accepting foreign investment. With that in mind, China Telecom should get into a serious search for a foreign partner in order to keep up with the competition.But what if those foreign partnerships were not as thriving as planned? In fact, in September 2010, Vodafone sell their 3.2% jeopardize in China Mobile, pocketing $6.5 billion which is nearly twice the original investment4. After the sale, CMHK and Vodafone will continue to cooperate in areas such as roaming, network roadmap development, multinational customers, and green technology and so on10. Vodafone left with a profit and the alliance stayed but most of the cooperation died in the separation process.What about China Unicom and SK Telecom? Well in November 2009, the Korean firm sold the whole 3.8% stake of China Unicom to unknown buyer(s). SKT also earned more than 50% of their initial investment but abandoned their business plans in China. China Unicom dropped CDMA business, which was SKTs main strength, and absorbed China Netcoms GSM part and decided to steering on GSM. However, SKT is continuing cooperation in technology and conversion service area.11 pass judgment foreign investment is not a definite key to mastery. As said before, China used to be a quite close and homogeneous market, so as the customers. Outsiders may have a secure time to take in how to conduct business in China and how to understand the needs of its people.In brief, the most important is for the host company to learn how foreign firm could help them in their actual market and if the fusion can be done efficiently. Surely in a few years there will be a lot of success story in the telecommunication firm in China, but for now China Telecom is better not to jump on the first offering.