December 11 marks the fifth anniversary of China's accession into the World Trade Organization (WTO) and in these five years, China's telecom industry has accelerated its pace of opening-up through overseas public offerings and joint ventures.

Foreign investors are penetrating the Chinese market and increasing their involvement gradually and it is expected their participation in the world's largest telecom market in terms of subscribers will be higher and higher. In all telecom service categories, value-added service is a priority.

In 2002, the State Council released a regulation on foreign investment into telecom enterprises in China to provide good and clear policy guidance to foreign investment and honour its commitment to WTO members.

The coming Telecommunications Law is expected to provide a better environment for fair competition and a regulatory guaranty to foreign investment and operations.

Gradual opening

The Annex 1B of the Final Act of the WTO stipulating the principles on general agreement on trade service, the Agreement on Basic Telecommunication Services and China's commitment on telecom service are the three main legal documents set to facilitate opening up of the sector.

According to the regulation of the State Council in 2003, foreign investors can establish foreign-invested telecom service entities, for both basic and value-added services, with approval from the Ministry of Information Industry and the Ministry of Commerce.

China's commitment stipulates the ceilings of stakes foreign investors can hold in a period of time and the process of opening region by region. It also says foreign investors should be treated equally as domestic companies, when providing services to consumers.

This July, the Ministry of Information issued a circular, reiterating China's commitment to the WTO on telecom services: foreign investors can not establish solely owned enterprises and must work in the form of a Sino-foreign joint venture. One main reason was that some foreign investors had been circumventing the rules in co-operation with local firms to carry out value-added services.

1

2

3

(For more biz stories, please visit Industry Updates)