Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 19

Therefore, the country practically has to adopt all three standards for the Chinese market. Would it be too costly for Chinese network carriers to invest in three independent networks?


Through careful examination of the ongoing domestic mobilization process within China that has evolved around the new 3G standard, particularly the interplay between domestic network providers, manufacturers, government ministers, and major foreign competitors, this case study illustrates that China's status as the biggest manufacturing base of telecom equipment, socialist bureaucratic politics, government regulatory preferences, and the advantage of its vast domestic market and export weight are together elevating China's “technology capacity” and eventually gaining China more leverage to compete within the global market through the application and development of a home-grown set of standards and technologies.

It is still too early to predict if China's efforts in the 3G game will be a market success or failure. Though it is a strategy any emerging country with China's relative technology capability and market size should try to adopt, it has left two noteworthy policy implications. First, there is only a subtle line between legitimate government industrial policy to enhance the competitiveness of Chinese infant industry and policies that unfairly promote national standards as trade barriers for foreign market access. Second, it is a high-risk and often too-costly undertaking. In the first five years of deployment of the 3G network, it is estimated that the total investment will reach as high as US $75 billion as China is about to adopt all three different standards and build three networks accordingly (Phoenix TV Online, 2006b). In other words, many other emerging markets may find the standard competition game too costly and therefore undesirable.

Apart from competitive technology, the TD case adds the influence of government policy and market size to China's new wave of standards initiative. China's aspirations for its standards initiative are ambitious. Leveraging its large market size, China has gone further than other developing countries by promoting home-grown standards for products that compete in China with products controlled by major MNCs. China's standard-setting policy is politicized and has taken an upside-down approach. China's standards strategy is still a work in progress. Many adjustments have been made during the course of experimentation, particularly the lessons learned from previous failures.Ultimately, with China's mind and might, this strategy is worth trying. In the meantime, China must be pragmatic to avoid imposing unnecessary costs on its economy.

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