Virtual China: Information Technology - Press Reviews, August 8, 1999

Weekly Press Review

August 8, 1999

Two major mobile telecom deals signed by Western electronics companies, Nokia and Motorola, topped China's IT news last week - along with a speech by a key government official promising more support for competitors of China's giant telephone company, China Telecom.

Nokia, the Finnish cellular phone giant, signed several contracts to supply US$500 million in cellular network equipment to the Beijing Telecommunication Administration (BTA), Xinhua reported. The deal will see Nokia supplying mobile switching centers, base stations and controllers to help the BTA expand its GSM-based cellular network.

Meanwhile, Motorola won a contract to supply US$370 million in cellular telephone equipment to China Eastern Communications Company Ltd., known as Eastcom, China's largest mobile communications products maker. The equipment will be used in networks operated by China Unicom, China's second largest telecom company, and China Telecom. The contract is Motorola's fifth and largest with Eastcom since 1995.

Underscoring Beijing's commitment to fostering competition to China Telecom, Gao Hongbing, an official of the Ministry of Information Industry, said at a conference in Hong Kong that Beijing will soon issue one or two new mobile-phone operating licenses to mainland operators.

In his speech, Gao said it was Beijing's policy to break China Telecom's monopoly on telephone service in mainland China. Already this year, Beijing announced it would launch three new telecom operators as a way of introducing new competition into the industry.

One of China's new telecommunication companies, the Shanghai Mobile Telecommunications Co., was formally launched last week, according to the People's Daily. The company will be responsible for the mobile telephone business formerly management by the Shanghai Long Distance Telecommunications Bureau.

The company was formed by a reorganization of the Shanghai branch of China Telecom that was ordered by China's State Council. Shanghai's mobile telephone business has boomed since it began in 1982. There are now 1.35 million subscribers generating an annual revenue of RMB 3 billion (US$362.76 million), the People's Daily said.

On the Internet side of the IT business, there were no new reports last week of hacking of websites run by followers of Falun Gong, the exercise and meditation group that was banned in China three weeks ago. After that ban, several Falun Gong websites in the U.S. and China said they had been attacked by hackers in the PRC at government addresses.

The People's Liberation Army, however, did raise some eyebrows with an editorial in its daily newspaper, the Liberation Army Daily, calling for the development of a national cyberwar capability by China. The paper said that recruiting civilian hackers and training "cyber warriors" at Army schools would help China prepared for an Internet war.

Last week also saw the usual slew of government and private company announcements of new Internet services adopted, launched, and promoted across China.

The country's first secure e-commerce payment system was rolled out in Hunan Province, developed by the Hunan Provincial Postal-Telecommunication Bureau and the Telecommunication Research Institute of China's Ministry of Information Industry. The bureau will use the system to help develop secure electronic banking, trading and payment systems.

The Shanghai city government announced it will open an Internet business service center - linked to 100 local department stores and offering online shopping, hotel reservations, and home delivery of groceries - on October 1.

And Netease, one of China's most popular portal sites, announced last week a new service to help visitors build personal home pages. So far in China, e-mail and chat rooms at portal sites have been very popular, but personal home pages have not taken off among the country's 4 million websurfers.

It will be interesting to see what turns personal expression takes in China on personal web pages - and how the government, already challenged a thousand and more ways by this new electronic medium, responds.

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October 22, 1999

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