The Evolution Of China's Mobile Telecommunications Industry

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114

Int. J. Mobile Communications, Vol. 3, No. 2, 2005

The evolution of China’s mobile telecommunications industry: past, present and future
Jiang Yu*
Department of Engineering, University of Cambridge, CB2 1RX, UK
Institute of Policy and Management,
Chinese Academy of Science (CAS), Beijing, 100080, China
E-mail: jy250@cam.ac.uk
*Corresponding author

Kim Hua Tan
Centre for Strategy and Performance, University of Cambridge,
CB2 1RX, UK
E-mail: kht23@cam.ac.uk
Abstract: This paper studies the evolutionary direction of the mobile telecommunications industry in China. Different stages of the industry development process with policy intervention and market competition are examined. The interaction of different players like the Chinese government, incumbent operator, and competitive operator within an actor-network is studied. A process-mapping technique is used to visualise the key drivers of the evolution trajectory of this giant industry. In the meantime, an analytic framework is developed. The future road toward 3G network in China is also analysed.
Keywords: evolution; mobile telecommunications; China.
Reference to this paper should be made as follows: Yu, J. and Tan, K.H.
(2005) ‘The evolution of China’s mobile telecommunications industry: past, present and future’, Int. J. Mobile Communications, Vol. 3, No. 2, pp.114–126.
Biographical notes: Jiang Yu is from Chinese Academy of Science (CAS) and is a visiting Research Fellow in the Department of Engineering, University of
Cambridge.
Kim Hua Tan is a Research Fellow in the Centre for Strategy and Performance,
University of Cambridge.

1

Introduction

In July 2001, the Ministry of Information Industry (MII) of the People’s Republic of
China announced that the number of its mobile phone users has reached 120.6 million, which makes China the largest mobile communication market in the world. Compared with other developed countries, this is indeed a significant milestone for China’s mobile telecommunications industry after 14 years of government-led development without
Copyright © 2005 Inderscience Enterprises Ltd.

The evolution of China’s mobile telecommunications industry

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privatisation. This industry has achieved a sustained development over the past few years despite the sluggish development of the global telecommunications market. The number of mobile subscribers in China had doubled each year from 1994 to 2001. By the end of
2002 China had 206.3 million mobile telecommunications subscribers (MPT, MII,
1994–2002), and had become one of the hottest spots for the international and domestic telecom operators, equipment and phone manufacturers. The evolution of
China’s mobile telecom industry since its inception in 1987 appears to be a multistage industrial development process with policy intervention and market competition. This research traces the periods of the evolutionary process to capture the patterns and drivers in such a process.
There is extensive literature on the relationship between industrial structure, entry and the diffusion of technology in the telecommunications industry. In the mobile telecommunications circles, systemic innovation examples are the successive generations of first generation (1G), second generation (2G) and third generation (3G) systems.
The revolution will impact not only our daily lives and the way business is conducted
(Siau and Shen, 2003; Maitland et al., 2002; Barnes and Corbitt, 2003). The time span of developing a new cellular system was longer than ten years, and demanded access to vast amount of resources. Thus, a mandate to develop such a system from policy makers including the government, or corporate boards was needed (Hughes, 1987; Lyytinen and
Damsgaard, 2001; Haug, 2002). Some studies have considered individual or a limited number of countries, focusing on mobile telecommunications market conduct (Parker and
Röller, 1997); on the role of country