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August 11, 2000

Telecom: Case Study of Greed Overpowering Socialism

Market researcher Dataquest puts the number of cellular subscribers at 51.7 million at the end of March. That made the PRC the largest market in Asia, just ahead of Japan's 51.1 million subscribers. The estimate for the current number of Chinese users is 56 million, and growing fast.

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Not surprisingly, inter-firm competition is emerging, encouraged to a point by the Ministry of Information Industry (MII). Fixed-line provider Telecom will likely get a license to provide cellular services in December, joining Mobile and Unicom. With the stakes so high, however, events are proceeding beyond Beijing's control. Unicom has apparently been moving into local provision of non-cellular services, which is technically illegal. The obvious motive is to get the jump on Telecom, whether the government likes it or not.

Recent technological developments have also shown the primacy of the market. Both the government and the industry have pushed WAP-enabled phones, the wireless Internet. But a national free trial period has been extended indefinitely due to indifference from consumers. Meanwhile, MII had to ban personal access systems, previously thought to be inefficient, because Telecom was successfully using them to steal cellular customers from Mobile and Unicom.

China E-Bytes
Industrial production rose a strong 12.8 percent in July to $23.7 billion, led by 15.2 percent growth at foreign-funded enterprises. Production is now up 11.4 percent for the year to date.
Textile exports jumped 42 percent in the first half to $23.8 billion, more than one-fifth of total exports. When WTO accession drops barriers to textile trade, a lot of foreign textile employees will need new jobs.
30,000 people in Shaanxi signed a petition to the provincial high court asking that lawyer Ma Wenlin be released. Ma lodged a complaint about unfair taxation on behalf of farmers in the province and was promptly arrested for "disturbing social order."

Keep up with the fast changing business environment in China, the world's biggest and fastest-growing emerging economy. Sinomania! recommends Orbis Publications, Experts in Emerging Markets, for a full range of in-depth coverage on China including daily/weekly/monthly reports and more.


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