Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 8

Seventh, this leads to an interpretation of its approach to standards that focuses on market power in the face of relative technological weakness. China can use the promise of its emerging market as an asset and leverage this in developing distinctive standards with an expectation that its standards policies will be taken seriously by international business organizations and foreign competitors in ways that the policies of other emerging markets would not be (Rosen, 2003; Naughton & Segal, 2002). The Chinese government has been able to demand and entice technology transfer on a large scale from eager investors vying for the opportunity to market and manufacture their goods in the country (Linden, 2004). Clearly, influencing the international business community to adopt Chinese standards is more difficult than extracting technology from foreign companies seeking entry into the Chinese market, hence strong government policy is essential. The telecom market is lucrative, with extensive technology spillover to other high tech sectors and to the national economy in general. China's mobile-communications infrastructure capital spending is expected to rise from $4.2 billion in 2006 to $5.4 billion in 2010 (Curley, 2006). Analysis International says in a recent report that China's first round of investment on 3G equipments will reach RMB 10 billion to 20 billion (US $1.25–US $2.5 billion). Every link of this industry chain will benefit from this market, including main equipments manufacturers, fiber and cable manufacturers, terminal manufacturers, system integrators, and other vendors of auxiliary lines such as electricity power, instruments, etc. In 2001, China overtook the United States to become the world's largest mobile communication market in terms of number of subscribers. According to the Ministry of Information Industry, the number of mobile phone users in China reached 649.7 million by the end of January 2009, according to Ministry of Industry and Information Technology (MIIT) (China Daily, 2009). The proposed restructuring and 3G licensing are expected to create a huge thirst for capital among Chinese telecom operators who are actively expanding and upgrading their existing networks in order to gain a favorable position in the country's upcoming 3G environment. China Unicom, for example, announced in August 2008 that it would invest 100 billion yuan from 2009 to 2010 in 3G-related networks and services. China Telecom also said it will invest 80 billion yuan to expand and upgrade its CDMA network (Wang, 2008).

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