London Calling for China Telecom. But Others Go Elsewhere.

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Chinese companies have been investing more money overseas as part of the “go global” policy but, apart from rare examples such as Lenovo, Haier and Huawei, these activities have largely been focused in the state-controlled resources sector.

Hong Kong-listed China Telecom now seems intent on joining the list of international Chinese businesses. Earlier this week, as Wen Jiabao was in London – dining with 300 movers and shakers of Sino-British business – the firm announced the set-up of its European business in London. Asia Times reported that the new branch is “a strategic step in its plans for overseas development”.

Meanwhile, the newly-crowned China Mobile (having apparently recovered from their failed attempt at taking over Luxembourg-based Millicom), also has its eyes on foreign prizes. In their case the focus is on emerging markets. The article notes:

    “‘If we finally make our mind up to go abroad, we will concentrate on emerging and developing markets, such as in Asia, Africa or Latin America,’ said Wang Jianzhou, president of China Mobile…He ruled out the possibility of squeezing into the packed European and North American markets, where the penetration rate of cellular phones is already high.”

This seems to be a preferred approach for many Chinese companies, who wisely aim for soft targets when venturing abroad. However, it seems that some at China Mobile believe the focus should remain on the untapped domestic market:

    “Those who oppose the potential expansion argue that it is risky and besides, vast rural areas of China remain untapped and offer great potential for further growth. Why bother to take risks abroad? “

No doubt this is a question being asked in many Chinese boardrooms. For some (especially those lucky enough to have market-leading positions in highly regulated sectors), the success, or otherwise, of companies like China Telecom may help them find an answer. For others (such as those in consumer goods), saturated, price-sensitive local markets may push them to look outwards more aggressively.

See news sources:

    China Telecom answers London’s call
    Asia Times Online, Hong Kong – 4 hours ago
    … Mobile, the world’s largest mobile-telephone operator … of China Telecom’s Frankfurt and London international network … He added: “China Telecom (Europe) wants to …

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