Chinese ICT Companies Going Abroad

　　Huawei, China's largest telecommunication² equipment company says it has hooked up one-third of the world's population to networks that use its gear.

 

　　ZTE, another Chinese powerhouse in the sector³, is now the world's fifth-largest company among its global peers.

 

　　Zha Xiaogang with the Shanghai Institutes for International Studies says Chinese ICT companies have many advantages in the global market.

 

　　"Firstly, the advantage of cost, because Chinese cost is much lower, even now compared to the US. And second advantage is the economy of scale, because we have so many product lines here. We have these production facilities together."

 

　　He adds that the conglomerate⁴ of production values of the high-tech⁵ sector is also very important when they go through competitions in the US market.

 

　　But their robust⁶ development seems have done little to help them enter the United States.

 

　　Statistics show that only five of the world's top 50 telecom carriers are not Chinese IT company Huawei's customers, and four out of the five are from the US.

 

　　William Chow, managing partner of the Deloitte TMT Group, says the US market is very uniquely locally driven.

 

　　"There oversea sales only occupy a very small portion of their global revenue, compared to other European company. For example like Vodafone their overseas sales leer 90 percent, and Dos Telecom, their oversea sales is 70 percent, but US telecom carrier like VERIAZON, AT&T, their oversea sales only occupy 1 percent of their total revenue."

 

　　He adds that domestic revenue is very important to US telecom carriers, so they will protect their local market as keenly as possible.

 

　　This results in some obstacles for Chinese companies to get in.

 

　　Li Yong is Vice⁷ Chairman of the China Association of International Studies.

 

　　"I think basically there are two obstacles. Actually they are kind of interconnected. One is protectionism. The second is the politicization of the trade and investment relations between China and some countries where Chinese companies do business and investment."

 

　　Cai Cuihong is professor at the Fudan University specializing in Sino-US relations.

 

　　She says there are mainly three strategies Chinese companies can adopt encountering protectionism, including appealing to arbitral authorities, bilateral⁸ negotiation⁹ and unilateral retaliation¹⁰.

 

　　"For example they can appeal to arbitration¹¹ committee of the WTO. But in ZTE and Huawei's case, the damage has already been made, while the appealing process is relatively¹² long, so it might not be so effective. Second is bilateral negotiation. Relative government departments, such as the Ministry¹³ of Commerce, can negotiate with the American counterparts. Unilateral retaliation is the last option, which is to give him a dose of his own medicine."

 

　　Other than those external factors, Chinese companies' market performances are also restricted by their own weaknesses.

 

　　Researcher at the Shanghai Institutes for International Studies Zha Xiaogang again.

 

　　"The first and the utmost one is they are not familiar with the local and legal environment. And the second is Chinese companies in general still lack of the experience of international operation, and we need to learn more in the future. And the third is they lack of the internationalized intellectual talents to support Chinese companies' expansion overseas."

 

　　He also says that the poor management of some Chinese companies overseas, especially in Africa and Latin America, have affected¹⁴ the industry's reputation.

 

　　However, professor Cai Cuihong suggests if they want to stand firm in the global market, providing competitive products will be the key.

 

　　For CRI, I'm Cao Yuwei.