China and SE Asia China

China and SE Asia China - Bill Harding & Glen Heller Philippines - Marcelino Racoma Indonesia - Riandy Hendrawan Thailand - Russ Mc. Guire

China

Environment Population: 1, 246, 871, 951 n 4 th Largest Nation n Literacy Rate: 81. 5% n Move from centrally planned economy to market-oriented n Within framework of Communist party n

Economy Quadrupling of GDP since 1978 n GDP per capita: $3, 460 n Opening up to foreign trade and investment n Major trade partners: Honk Kong, U. S. , Japan, South Korea, Germany n

Role of Telecom Growth of telecom instrumental to economic development n China’s Strategy n – Import of technologies – Establishment of joint ventures – Domestic development Technology transfer for access to market n Buy local policy n

The Players Local providers: China Telecom, China Unicom n Joint ventures n – Beijing Nokia, Beijing Ericsson n Fierce competition in mobile market – Motorola, Ericsson, Nokia, Nortel n Japan’s NEC providing advanced trunk telecom network

Infrastructure One of most dynamic markets in world n 112 million telephones at end of 1998 n – 87 million fixed line, 25 million mobile n Growth rate in 1998 – 24% fixed line, 88% mobile n Telecom service sector growing at 48% annual clip

Teledensity

Mobile System 25 million users, third largest in world n 60% of telecom investment to cellular market n Cellular penetration 2% n Key users are business people and young people n Design important n

Transmission Media Interprovincial fiber-optic trunk lines n Cellular systems n Domestic satellite system n International satellite system n Fiber-optic links to Asia countries n Buildout of broadband n

Use of Internet 324% growth in 1999 n 75. 6% under 30 years old, 79% male n 50% access from home, 37% access from school or work n Government pushing development n 20 million people access by 2003 n

Opportunities/Threats for Foreign Companies n n Opportunities Low penetration Need for advanced technologies Increasing government investment n n Threats Aggressive domestic manufacturers Buy local policy Technology transfer for market share

Telecom Standards n Total Access Communication System– European Standard est in China @ 1987 – Analog cellular telecom network n n Analog sales have slumped since ‘ 94 as users move towards GSM networks Global Systems Mobil (GSM) – Began in ‘ 94 when Unicom established – Provided nations first digital GSM network

More Standards n Code Division Multiple Access (CDMA) – 4 international companies are currently allowed to operate pilot projects with this technology in 4 chinese cities, Lucent in Guangzhou, Motorola in Beijing, Nortel in Xi’an and Samsung in Shanghai n Despite success China’s Ministry of Information Industry has not allowed the commercial deployment of CDMA in China

Providers of Local and Global Telecom n China Telecom - run by Ministry of Information Industries – Provincial subsidiaries Guangdong Telecom-largest telecom operator in China n Guandong is the most affluent and technologically advanced in China n – Beginning to rival AT+T as the largest provider of telecommunications services in the world

Local + Global Providers n China Unicom - domestic rival to China Telecom – More flexible and customer oriented however reliability is often questioned – Only have 5% of national market

Local + Global Players n Ji Tong Communications – Niche player - building a nationwide backbone n Links networks belonging to government ministries, universities, research institutes and state owned organizations as part of a value added network (VAN)

Government Regulation n As of ‘ 97 meeting of Ninth Party Congress changed who was in charge of telecom policy – March ‘ 98 the Ministry of Post and Telecom (MPT), Ministry of Electronics Industry (MEI), and parts of the ministries handling aerospace and radio and TV were merged to create the Ministry of Information Industries (MII)

Partnerships for Advancement n Post + Telecom Administrations (PTA’s) – Wary of foreign investment n There is realization though that foreign products and technology are needed in order to allow local companies to participate in the global information age – Fuels desire for joint ventures with technology transfer

Policy Liberalization n Developing communications infrastructure – Leaders in MII concede that it may take 20 yrs before domestic companies catch up with the world – Feared that the Ministry may do more to close the market and protect Chinese companies rather than liberalize policies

China’s Foreign Investment Laws n Preference given to sourcing locally – Products produced by joint ventures in China must contain 60% local content in order to qualify as domestic products

Future role of Telecom n China as a B 2 B, B 2 C player – Country in general suffers from a dearth of PC’s which is seen as a huge potential stumbling block Only 10% of large and medium sized Chinese firms are now online n However, most Chinese business people carry a mobile or a pager n – Planning a system which could send B 2 B purchase inquiries via mobile devices to 2 m manufacturers

Growth n Internet use grew at 324% in 1999 – In ‘ 98 there were 2. 1 m users, by the end of ‘ 99 there were 8. 9 m – Chinese government expects that over 20 m people will have internet access in the country by 2003

The Philippines

Background n. Archipelago consisting of over 7, 100 islands and islets n. Includes Chinese over 50 ethnic groups of Spanish, Malay, and descent n. Mountainous with narrow to extensive coastal lowlands

Social, Political, and Economic Environment n. Struggle to regain independence and freedoms n. Unitarian Republic with strong return to democracy n. Improving the overall economy

Technological Infrastructure n. Teledensity 4. 6 per 100 persons, increase of 3% from 1995 n. Development of the Philippine Information Infrastructure (PII) n. Turn the Philippines into the Knowledge Center of Asia within the first decade of the 21 st century

Tele. Com Standards and Service Providers n. Department of Transportation and Communications (DOTC) n. National Telecommunication Commission (NTC) n. Philippine Long Distance Telephone Company (PLDT)

Gov Regulation and Private Partnerships n. Membership n. Oracle in the ITU and ISO Academic Initiative n. RPWEB

Future Role of Telecommunications n. Deregulation n. Satellite and privatization competition n. Philippine IT City

Indonesia Telecommunications

Map

Social n Estimated Population : 220 million n Literacy rate : 83. 8% n Religion : 88% Islam, 10% Christian, & 2% others

Economic Agricultural industry n Some high technology industry n 1997 -present: economic crisis - unhealthy banking sectors - untenable levels of private foreign debt - uncompetitive business practices n

Telecommunications Infrastructure Telephone : - 25 per 1000 people - Domestic : fixed wireline, microwave - International : fiber optic submarine cable, satellite n Mobile phone : - 5 per 1000 - Global System for Mobile (GSM) n

Telecommunication Infrastructure - Advanced Mobile Phone System (AMPS) - Nordic Mobile Telecommunications (NMT 450) n Paging - 700, 000 subscribers n Satellite - Coverage of most Asia and some Australia & New Zealand

Telecommunication Infrastructure n Internet - First available in 1995 - Dial-up 56 Kbps, ISDN, cable modem - Active providers: 30 - 250, 000 subscribers - PC’s owner : 8 per 1000 people

Service Providers Domestic wireline (monopoly) - Telkom Indonesia: gov n Domestic wireless (duopoly) - Telkom & Ratelindo: private n International Gateway (duopoly) - Indosat: gov - Satelindo: private n

Cellular Providers GSM - Telkomsel, Satelindo, Excelcomindo n NMT-450 - Mobisel n AMPS - Komselindo, Metrosel, Telesera n

Government Regulations Ministry of Tourism Art and Culture - Directorate of Post & Telecommunications n Telkom Indonesia remain for domestic and domestic long distance n Deregulation - Privatization Telkom (domestic) & Indosat (int’l) - Competition for other telecom markets n

Future Role Potential market n Improve business sector & education n Dilemma facing economic crisis n Modernize Infrastructure - establish backbone to connect all islands - telephone line, wireless, internet n

Thailand Telecommunications MAP

Social, Political and Economic Environment Geography n n n 514, 000 square kilometers Tropical climate Borders Burma, Laos, Cambodia and Malaysia Population n 60, 000 n n 94% literacy rate 35% domestic savings rate

Economic Environment Government n n constitutional monarchy very progressive since 1800’s Economy n one of the most advanced in SE Asia, but the devaluation of the baht triggered a financial crisis in 1997 current 2% economic growth rate 1999 service and export oriented n GDP $119 billion n n

Technological Infrastructure Domestic Teledensity n n n n 5 per 100 teledensity- 7, 400, 000 lines Current Surplus of Lines- 1997 waiting list Good coverage to rural areas 4. 5 million urban lines 2. 9 million rural lines 671. 6 million domestic calls 86 million international calls

Technological Infrastructure n n Under the MOTC the TOT and CAT have provided traditional line services Thailand has latest technology in value added services through license agreements Full government support E-commerce and Internet growth

Telecommunications Standards and Protocols and Service Providers TOT and CAT retain domestic line monopolies set standards n Liberalization through licensing and partnerships using new frequencies n Example: Telecom Asia (a NYNEX joint venture) and Thai Telephone and Telecom have the contract for the additional 3 million lines n

Telecommunication Service Providers Value Added Services n licensees for paging, cellular, PCS, data/voice operators, fiber optics n Shinawatra owns majority of cellular, paging and broadcasting licenses n Thaicom 1 and 2 launched in early 1990’s by Shinawatra provide satellite services

Governmental Regulation and Private Partnerships MOTC n Ministry of Transport and Communications PTD n Post and Telegraph Department TOT n Telecommunications Authority of Thailand CAT n Communications Authority of Thailand

Future Role of Telecommunications in Thailand Positive outlook as economy improves n Telecom projected to grow faster than GDP n Progressive government policy benefits both Thai citizens and businesses n Build Transfer Operate (BTO) policy n Licensing agreements n Internet and E-commerce n

China and SE Asia China — Bill Harding