WTO fuels fast growth of China's high technology sector

China's entry into the World Trade Organization has had a far-reaching effect on the country's high technology sector.

With the government gradually ceding control of the technology sector to encourage market competition during the past decade, companies have discovered the real potential of Chinese consumers.

With more competitors coming in the field, technology products and services are no long a luxury for the Chinese people. That has helped China to become one of the world's largest technology markets.

With the elimination of many trade barriers, foreign companies are also starting to move their factories to China and establish R&D centers in the country, hoping to make full use of the country's relatively low-cost talent resources.

That has not only made China one of the world's largest factories of information technology (IT) products; it has helped the country develop its own technology.

Even up against foreign giants, Chinese companies have proven themselves in product innovation, market response and cost reduction.

In industries such as personal computer and telecommunications sectors, the Chinese government has reduced tariffs and opened the market to outside competition.

This competition has led to the birth of Chinese companies such as Lenovo, Huawei Technologies and ZTE, which have moved beyond winning a major share of their home market to begin expanding aggressively to foreign markets.

In the telecommunications sector, where the Chinese government still denies full access to foreign firms due to national security concerns, the power of the marketplace is playing a major role.

During the past decade, Chinese telecom operators have been transformed from rigid government units to competitive commercial companies through restructuring and overseas listings.

That has led foreign telecom operators to buy stakes in Chinese carriers to bring in their experiences and share the benefit of their growth.

The new arrangement has led to the 3G era, in which China Mobile, China Telecom and China Unicom are all aggressively promoting their third-generation services to consumers and introducing the latest products such as US-based Apple's iPhone.

The increasing competition in the telecom market has also lowered the cost of phone bills in China, which also has helped the country become the world's biggest telecom market.

In the Internet era, China joining the World Trade Organization also made it possible for overseas venture capitalists to invest in the country, which now has the world's largest Internet population.

Most Chinese Internet giants such as Sina, Sohu, Baidu and Alibaba have all been funded by foreign capital at their early stages of development, and they have been listed in foreign stock markets.

Because it is almost impossible for them to raise money from local sources due to the country's lack of a mature investment environment, foreign venture capitalists have shared in the growth of China's dynamic Internet market.

With the country's launch of its own NASDAQ-like stock exchange, it is expected that more technology companies will receive funds to help grow China's economy.

(China Daily 11/02/2009 page3)