CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 2, No. 14 - October 15, 2001
TOPICS THIS ISSUE:
- China's Evolving Telecom Market
- BOCO - TCSI Deal
- Shenzhen Hi-tech Fair
- Fight Against Software Piracy
- Foreign Interest in the Chinese Web Market
China's Evolving Telecom Market
The establishment of China Telecom was a very important reform and restructuring of China's telecom industry, especially taking into account that China is the second largest telecommunication market in the world. With the evolution toward a more open telecom market in China, resulting in more competition, the Chinese players are changing tactics.
The two telecommunications giants China Telecom and China Unicom have signed an agreement on rules to interconnect their networks. The agreement includes the splitting of service charges and is seen both as the foundation for the Unicom CDMA network and as a preparation for the competition that will arise once the telecom market is no longer shutting out international investors. CDMA (Code Division Multiple Access) mobile network and Unicom calculates that it will be used to 70% in its first year of operation, equaling approximately 7 million people.
The Chinese mobile telecom giant China Mobile faces competition from China Unicom and both are anxious to secure customers before the WTO accession. China Mobile expects to have 100 million subscribers by the end of the year and calculations show that China has surpassed the United States as the world's biggest mobile phone market. The issue at hand is that the market seems to be saturated at the moment. Even though some average penetration rates seem low, such as 30% in Shanghai, China is still a poor country with many people who cannot afford a mobile phone. With the best customers already picked new tactics are needed to open up to new markets. In other words, more discounting will be necessary as the companies try to compete for customers on price.
(Sources: China Daily; Business Week Online)
BOCO - TCSI Deal
A software deal that was signed during the week of October 8 between the Beijing-based Network Management Solution Integrator (BOCO) and TCSI Corporation, headquartered in California. TCSI Corp. is a leading software products and services company for the global telecommunications industry and BOCO is a leading Chinese telecom network management solution integrator. The deal between the two is a 3-year marketing and sales agreement, which will give TCSI larger exposure in northern China, where BOCO has a strong presence. BOCO's strong marketing relationship with service providers such as China Unicom and China Telecom will mean broad exposure for TCSI to the growing Chinese telecom market. The positive repercussions for BOCO is that the cooperation will help them expand and enhance wireless services that are provided by gaining access to more infrastructure to support wireless users.
(Source: Business Wire)
Shenzhen High-tech Fair
The high-tech fair was first held in 1999 after State Council approval. This year's fair was held from 12-17th October, also in Shenzhen. The fair ultimately aims at increasing and promoting economic and technological cooperation between China and foreign countries.
Topics on the agenda included optical networks and transforming the Telecom Business; next generation wireless Internet and communications; how e-commerce drives the sales of the insurance industry; software; application systems and digital technologies. More in detail, the emphasis was on the following: 1. Introducing the latest technology, products, solutions & services in the communication, networking and computer industry. 2. Introducing the latest in communication and networking technology and wireless communication. 3. E-commerce solutions, security technology and on-line transaction tools. 4. Software and applied systems such as ERP, CRM, finance systems and Linux.
(Sources: International Data Group, China High-tech Fair)
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Fight Against Software Piracy
One of China's largest software companies, China National Computer Software and Technology Service Corp., has signed a partnership with Objectiva Software Solutions. The core of the agreement is for the Chinese software company to expand into the U.S market and for Objectiva to gain access to the knowledge of the Chinese software engineers. China National Software Company was established in 1990 and its main business is to service high technology enterprises and to conduct R & D in advanced software technologies. What particularly striking about this deal is that it combines the skills of top Chinese technology professionals with a way to work effectively and extensively in the U.S market.
The Chinese software industry should also be on its way of becoming more profitable due to the State's increased fight against piracy. The area, which has been targeted in particular is the government's usage of software, and the campaign is meant to enhance awareness of protecting copyrighted software. To this end, the Beijing Municipality has pledged that all organizations within it will use authorized software by the end of this year. It is estimated that the promotion of copyrighted products will bring about RMB 100 million in revenue and that a "new" market of government users could increase the market size three to fivefold. A favorable environment for software products, which includes fighting piracy, is very important if the industry is to survive and flourish says Li Ruxiong, president of Federal Software.
(Sources: Business Wire, China Daily)
Foreign Interest in the Chinese Web Market
The pending Chinese WTO accession brings many good things with it. Firms such as Yahoo! and Microsoft are trying to get a piece of the market prior to accession. Another factor pushing foreign companies is of course the successful bid to host the Olympics in 2008, which enhances the strategic importance of China on the web market.
The influx of foreign firms causes Chinese national companies to consider cooperation with other local businesses. For example the Nasdaq listed Sina.com is looking to cooperate with other companies in order to develop talent and management. Sina.com specializes in media and Internet services offering online news, e-commerce and entertainment. The company is currently negotiating with Taiwanese and Hong Kong businesses (Tom.com and Taiwan Business Weekly Media Group). Sina has also acquired a stake in Sun TV Cybernetworks in order to become the largest broadband content provider. This new move toward cooperation and partnership has two sides to it. One is that Sina.com has a relatively strong market position, despite reported losses, and can offer prospective partners a good plateau for entering the mainland Chinese market. The other side of it is arguably that it could strengthen Sina.com's presently quite weak position. It is assumed that consolidation of domestic businesses have merely begun and will continue with the entry into the WTO.
(Source: China Daily)
Lehman Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
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The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
