China leads the world in telecom users
China’s telecommunications industry has seen revolutionary transformation and growth over the past three decades. Chinese Internet users number more than 150 million and the PRC expects to quickly pass the US in total numbers of connected citizens. The number of mobile and fixed-line telephone users soared from a mere 2 million in 1980 to a total of more than 800 million in 2007 – the country took the number one rank in the world in the number of telephones.
China has been the most successful developing nation in history for spreading telecommunications access at an unparalleled rapid pace.
The road to becoming number one
Chinese exhibitors and Forum speakers will play a key role at this year’s ITU Telecom World event. Amongst the range of high-level participants from China’s telecommunications industry – which includes China Mobile, China Unicom, Huawei Technologies, TDIA and ZTE Corporation – is Datang Telecom Technology and Industry Group, a Chinese telecommunication equipment vendor best known for its leading role in developing the Chinese TD-SCDMA 3G mobile telecommunications standard through its subsidiary Datang Mobile.
A man with great insight as to the extraordinary evolution of the country’s telecommunications industry is Caiji Zhen, who has served as chairman and president of Datang since June 2006. He is responsible for the overall efforts to drive technology breakthroughs, industrialization and market promotion of 3G mobile communications in China.
Zhen’s background in the industry is impressive and his experience gives him a bird’s-eye view of the industry not only from a Chinese perspective but also from a global standpoint. From 1995 to June 2006, he successively worked as, among others, deputy chief engineer of the Directorate General of Telecommunication, Post and Telephone of China, president of the Telecommunications Research Institute of the Ministry of Information Industry and assistant chief engineer of China Mobile.
This extensive experience allows him to describe how China conducted its remarkable “telecommunications revolution”.
“Since the foundation of the People’s Republic in 1949,” Zhen explains, “I view the progression of our industry to have taken place in three main phases. In the 1950s, the telecommunications systems and facilities in China were outdated and rudimentary, consisting mainly of equipment imported from abroad. Those that did exist were largely limited to the eastern coastal cities, the Nanjing-Shanghai region, and a few interior cities. In the 1950s, existing facilities were repaired and considerable progress was made toward establishing a long-distance telephone wire network connecting Beijing to provincial-level capitals.”
The second phase of development in Zhen’s view, took place in the late 1970s. Zhen pointed out that, overall, China’s telecommunications services improved enormously during the 1980s. “As China opened its doors to the outside world, the attractiveness of the country as a low-cost mass producer within a huge internal market drew the attention of the telecom industry. It was a time when a number of global players undertook agreements with Chinese industrial companies, for the manufacture of telecom equipment.”
An interesting example of such an agreement was the creation a joint venture established by Nanjing Panda Electronics Company and Ericsson of Sweden to produce communication system products including the design, production, sales and installation of GSM/CDMA digital mobile communication system and switches. It was considered to be the first Sino-foreign joint venture licensed to access to digital mobile communication system.
“This was a transformational period,” says Zhen, who is also a professor of engineering and holds a doctorate degree, “when managerial competence and production processes were better understood and assimilated by our people. Our continuous collaboration with foreign companies also allowed us to review certain policies that were in place at the time and that hindered progression of telecom usage, such as a US$ 300 landline activation fee, which was consequently discontinued. The pace of telecommunications growth and technology upgrading increased even more rapidly after 1990, especially as fibre-optics systems and digital technology were installed.”
Caiji Zhen’s third phase of development of the Chinese telecom industry appeared in the late 1990s and early 2000s when foreign investment in the country’s telecommunications sector further encouraged growth. Datang, the conglomerate he heads, was influential during this period. It is during this time that local research and development finds its roots.
“Datang was founded in September 1998 by the China Academy of Telecommunication Technology,” Zhen explains, “and in the early part of the 21st century we successfully launched the mainland’s first manufacturing company for third-generation mobile-phone equipment, using indigenous 3G technology to make real products. It was one of the most exciting times in our company’s history. As local R&D and technology took off, so did China become the world leader in the early 21st century in terms of number of cell phone subscribers.”
More to come
Looking forward, Caiji Zhen comments on the future of the telecom industry in his country: “It took us some thirty years to dramatically progress from no infrastructure to where we are today. I strongly believe that we are already in phase four of our development, where innovation will replace the low-cost attractiveness of China. Although, for example, Datang’s other areas of business include high-capacity digital switching, optical networking, data communication and digital microwave communication equipment and software and system integration services; however, revenue from these sectors is far outweighed by the company’s spending on TD-SCDMA research and product development. This will put us, along with our other colleagues, in the forefront of innovative new products and services. As with the rest of our economy, we will probably see our industry evolve from global manufacturer to worldwide creator of groundbreaking technology!”
Not bad for a country that shows an increase in its mobile subscribers of some 4.78 million per month – a level unmatched anywhere else.