Locals 'Have Edge in Mainland Telecoms'

With the gradual deregulation of China's telecommunication industry, Hong Kong should apply its experience to seize opportunities in the still immature market on the Mainland, a local industry player says.

Speaking in Hong Kong earlier this month at the "China Information Technology Experts Forum" organized by China's State Information Office, Tony Hau, chairman of China Motion Telecom (CM Telecom), expressed the view that telecoms operators in Hong Kong are better placed than their multinational counterparts to become key players in the Mainland market, due largely to the locals' familiarity with the country and experience gained from their own rapidly evolving market.

Based in Hong Kong, CM Telecom is best known for providing cross-border roaming-capable paging and trunked radio services, as well as retailing of mobile phone-related products.

According to Hau, Hong Kong operators have a lot to contribute to the maturation of the Mainland telecoms market.

"Following the general breakup of enterprises from political entities, China's telecoms companies that were run by government officials have still not gotten fully accustomed with the game rules of an increasingly free market," said Hau. "Competition is not yet sophisticated, nor is the marketing expertise of some of these companies."

Hau noted that the promotional technique most widely used in China is price reduction, which cuts into the margin. Mainland vendors would be well advised to replace that technique with special offers or value-added services that have been adopted in Hong Kong and other markets to attract customers, he said.

Enviable Position

While the Mainland stands to benefit from what Hong Kong companies have to contribute, those companies stand to benefit as well, Hau said.

"Multinationals very often are not acclimatized to the local weather. Some of them have failed to understand the undercurrent in the native culture and local business practices, creating misunderstanding and conflicts more easily," said Hau. "The evolution of telecoms technology makes it possible for China to catch up with or even leapfrog other countries. The Internet has hastened the process of globalization, and these environmental changes are favorable to China's reformation."

"Market opening is a must," Hau said, adding that Hong Kong, which shares common aspects of culture and language with the Mainland, is in an advantageous position.

Hau pointed out, moreover, that Hong Kong telecoms operators need to understand and appreciate the differences within the Mainland's market environment. "There's an imbalance in China's economy, and focuses of the market vary. For instance, the western part of the country is much more backward than the east in many respects. Consumer behavior, purchasing power and the market structure differ greatly across the country as well," he said, adding that Hong Kong companies should take diverse approaches in targeting the diverse Mainland market.

Hau also suggested some strategies to lower the barrier for entry into the Mainland telecommunications market:

* Select high-powered partners -- who can be different in different regions of the country -- to act as guides.

* Take advantage of the competitive edge in marketing skills, especially in brand building, which is commonly lacking among Mainland operators.

* Position product and service offerings to cater to different market segments, accounting for such factors as profession, gender and purchasing power.

* Transfer and cultivate a service-oriented business culture among Mainland employees.

* Be prepared to enter the market for the long-haul and understand that it will be a long-term investment.

* Understand that delivering a return to the community is as important as delivering a return on investment.

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