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A China story of interest

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    The following is from the South China Morning Post of today. Ths is of significance to VXS given its aim to penetrate the China market with its moblie phones and engines.

    Thursday, May 30, 2002

    China expects phone boom
    User numbers in world's biggest telecoms market should reach half a billion by 2005


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    China will have half a billion phone users by 2005, according to Minister of Information Industry Wu Jichuan.
    He said forecasts showed the penetration rate - the percentage of people who have a fixed line or mobile phone - would rise to 40 per cent of the population within three years, up from 15 per cent now.

    China is the world's largest telecommunications market, with 350 million users - 160 million mobile phone and 190 million fixed-line subscribers - ahead of the United States, which has about 290 million users.

    However, Mr Wu, speaking at an Asia-Pacific Economic Co-operation meeting for telecoms and information industries in Shanghai, warned mainland equipment suppliers and carriers to be cautious about shifting to third-generation (3G) mobile technology.

    Being also the world's fastest-growing telecoms market, China offers huge potential for foreign and domestic equipment vendors, but analysts said they should not get too excited as the competition would be keen.

    "If you're an equipment supplier, there are a lot of guys trying to enter China . . . there are many people pushing for the pie," ABN Amro analyst Joe Locke said. "Although it is a big market for investment, it is going to be constantly very competitive."

    However, analysts believed the strong organic growth in China's telecom market, though less impressive compared with previous years, would leave room for all mainland carriers to maintain double-digit growth in the next few years despite intensifying competition.

    China's fixed-line users had more than doubled to 179 million by the end of last year from 1998, while mobile users increased nearly five times to 144.8 million.

    The Ministry of Information Industry expects the number of fixed-line users to grow by 21 million this year and mobile users by 55 million.

    Having painted a rosy picture for China's telecoms market, Mr Wu said the communications industry was facing the most severe challenges since the technological revolution.

    "Cutting-edge technologies alone cannot generate an effective profitability model if we do not have practical applications. Over-anxiety for quick results and pell-mell development inevitably lead to economic bubbles, which has been proven in 3G mobile communications development.

    "Therefore, we must take a reasonable and practical attitude, follow economic laws and combine technological and market development. Only in this way can we revitalise the infocom industry and expect further growth," Mr Wu said.

    He also said that after learning from other countries' 3G experiences, China should take a practical attitude to high-speed data communications, as the process would be long and progressive and more risky than voice communications.

    "We focus on developing content and tapping market potential in 3G mobile communications and broadband access network build-out. Still, we shall learn from experiences in other countries and strengthen macro-economic controls and market regulation so as to guard against risks and maintain sound growth."

    European and North American nations have experienced delays in rolling out 3G networks due to immaturity of markets and technology, resulting in huge oversupply crippling equipment makers.

    Although industry participants have been urging the ministry to come up with a detailed policy on the issuing of 3G licences, Mr Wu did not give a clear picture yesterday.

    The China Mobile Communications Association, an independent industry body formed by the country's leading telecoms equipment suppliers and carriers, has urged the regulator to issue 3G licences as soon as possible, so that China can catch up with its overseas counterparts in 3G development.


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