China's telecommunications companies will see an influx of foreign and more experienced telecoms operators coming to ply their wares next year. Lured by the promise of millions of new users and billions of dollars of potential revenue, foreign telecoms firms facing mature markets at home will expand into the mainland as fast as Chinese regulators will allow them to under World Trade Organisation commitments. Until then, this year will be a time for domestic telecoms firms to dig in, make their stand and sharpen their operational edge to be as competitive as their future adversaries. The barbarians are really at the gates, and already peering across the wall to study and understand market entry into China. From the latest Ministry of Information Industry report, China already has six dominant players in the telecoms market: China Mobile with 37 per cent, China Telecom with 30.7 per cent, China Netcom with 16.2 per cent, China Unicom with 14.5 per cent and China Satellite Telecommunications and Railcom with 1.6 per cent. It has only two mobile operators, China Mobile and China Unicom. Compare this with Hong Kong, which has five mobile leading operators, or Singapore, which has three. China Mobile is clearly the dominant mobile operator in the mainland, with China Unicom in a lagging second place. This year, both China Mobile and China Unicom have begun to hone their strategic alliances and services in preparation for the arrival of the foreigners. China Unicom just two weeks ago announced deals with SK Telecom of Korea to bring more enhanced services and experience on CDMA (code division multiple access) networks to China. Chinese mobile operators should take some cues from vendors of domestic personal computers such as Legend Holdings, which faced competition from foreign manufacturers including Dell and Compaq much earlier than in the regulated telecoms industry. Legend itself was a Hewlett-Packard distributor in the 1980s. Although faced with seasoned firms offering advanced feature-laden products, Legend's distribution and sales network set it apart from foreign rivals, who had to create new partnerships and networks to compete. This gave the company more time to match the competitiveness of foreign manufacturers and to learn techniques for sales to corporate accounts. China Mobile and China Unicom outlets are scattered all over China and command a vast stake in the mainland's brand landscape. Sales, service centres, shops, billing systems and brand identity are just some of the advantages local mobile operators already have. Judging by its ability to improve and upgrade customer service and usability, China Mobile is taking this preparation time quite seriously. In 2000, when I bought my first China Mobile prepaid SIM card in Guangdong, there were no instructions in English and the activation of the number required a call to China Mobile to explain your account details in Chinese. Fortunately, helpful staff in the China Mobile store made the call for me. But in today's China, the process of buying a SIM and recharge card from a news stand is as simple as buying a newspaper. Of course you still have to select a phone number, the price of which varies depending on how many lucky digits it contains, but otherwise the process is automated and efficient. There are also now step-by-step English instructions provided for activation through a bilingual Chinese and English phone system. The whole user experience is a pleasant surprise. The products and offerings of Chinese telecoms operators are now almost as feature-rich and extensive as those that can be found in North America and the rest of Asia. It will be those little things - like user experience, service, billing, pricing and, of course, line quality - that will help the domestic operators protect market share from foreign arrivals. After a week of using my new China Mobile phone number, I am satisfied with its functionality except for the fact that I still do not know how to send or receive international text messages. That may mean I will have to ask somebody or read a manual, which is something I have not had to do elsewhere in Asia. There is always some room for domestic operators to improve. Frank Yu is a visiting researcher at Microsoft Research in Beijing. His e-mail address is Frank@BrandRecon.com
