In the pilot area, foreign investors can provide value-added telecommunications services on a wholly-owned basis
Author/ IT Times reporter Qian Lifu
Editor/ Wang Xin, Sun Yan
The door of the mainland's telecommunications business to the outside world has been opened even wider.
In April, the Ministry of Industry and Information Technology (MIIT) officially issued the Notice on Launching the Pilot Work of Expanding the Opening-up of Value-added Telecommunications Services, the core content of which is to remove the restrictions on foreign ownership of six types of value-added telecommunications services in four pilot areas. These six types of value-added telecommunications services include Internet data centers (IDCs), content delivery networks (CDNs), Internet access services (ISPs), online data processing and transaction processing, information publishing platforms and delivery services in information services (except Internet news information, network publishing, network audio-visual, and Internet cultural operations), and information protection and processing services. The four pilot areas are the Beijing Comprehensive Demonstration Zone for the Expansion and Opening-up of the Service Industry, the Lingang New Area of the Shanghai Pilot Free Trade Zone and the Leading Area for Socialist Modernization, the Hainan Free Trade Port, and the Shenzhen Pilot Demonstration Zone of Socialism with Chinese Characteristics.
To put it simply, in these pilot areas, foreign-funded enterprises can provide relevant value-added telecommunications services on a wholly-owned basis.
The entry of foreign-funded enterprises will undoubtedly intensify the competition in the domestic telecommunications market. However, this time the industry reacted very calmly, unlike at the beginning of the opening up of the telecommunications industry, when there were calls for "wolves".
Due to its importance in terms of economy, society and national security, the telecommunications industry has been closed to foreign investors for a long time. After China's accession to the WTO, the mainland's telecommunications market has gradually opened up to the world, but there are also corresponding requirements.
The Regulations on the Administration of Foreign-Invested Telecommunications Enterprises, promulgated in 2001, stipulate that foreign investors must provide telecommunications services in the form of joint ventures, that is, they must cooperate with Chinese telecommunications enterprises, and there is an upper limit on the proportion of foreign shareholdings, such as 49% in the field of basic telecommunications business and 50% in the field of value-added telecommunications business.
On the one hand, moderate opening up leaves enough room for domestic enterprises to develop, and on the other hand, it also puts certain pressure on domestic enterprises to continuously improve their own strength and service user level in the competition.
Although the Regulations on the Administration of Foreign-Invested Telecommunications Enterprises have been revised twice, and the conditions for foreign investment have been relaxed, such as no longer requiring major foreign investors to have "good performance and operational experience", the upper limits of 49% and 50% shareholding have always been in place.
In recent years, after a series of landmark events such as government and enterprise divestiture, IPO listing, spin-off and reorganization, the competition in the domestic telecommunications market has become increasingly fierce, and operators have gradually become modern enterprises that adapt to the market environment. The overall strength of China's information and communication industry has grown rapidly, and China's operators have gone from being completely backward at the beginning of opening up to being superior today, in terms of user scale, service level, technical strength and capital strength.
Chinese users now enjoy the world's "fast and cheap" communication services, which is the result of the rapid improvement of the development level of China's information and communication industry. By the end of 2023, the mainland will rank fourth in the world in terms of fixed broadband speed and mobile broadband speed, far exceeding the global average. By the end of 2023, the fixed broadband cost of mainland users is the fifth lowest in the world, and the cost of mobile broadband is far higher than the global average.
With the continuous improvement of the overall strength of the mainland's information and communication industry, the door to opening up to the outside world is opening wider and wider. The "transparent protective cover" was gradually broken, and the first was in the Shanghai Free Trade Zone, which further opened up the foreign shareholding ratio of three value-added telecommunications businesses. Among them, there is no restriction on the foreign shareholding ratio of the app store business and the store-and-forward business, while the foreign shareholding ratio of the operating e-commerce business is relaxed to 55%.
This time, the door is wider open, not only in terms of more places to pilot, but also in terms of the variety of businesses and the importance of the business. For example, the Internet data center and its subordinate sub-project "Internet Resource Collaboration Business" opened on a pilot basis are open to foreign capital outside Hong Kong and Macao for the first time, and there is no restriction on the share ratio. This is conducive to attracting foreign investment in the investment and construction of computing infrastructure in the mainland, and providing more choices for domestic enterprises. For example, the pilot program breaks through the restriction that the foreign shareholding ratio of electronic data interchange business and network/electronic equipment data processing business shall not exceed 50%, which means that qualified foreign-funded enterprises can provide IoT platform services as sole proprietorship, which is conducive to promoting the higher-quality development of the Internet of Things industry in mainland China.
But at the same time, we see that whether it is in the field of Internet data centers or Internet of Things, Chinese operators and Internet giants have strong strength. The increase in the degree of openness will further intensify market competition and boost the overall development of the industry, but it is difficult to shake the fundamentals.
The stronger the stronger, the more inclusive and open it will be. Today, China has built the world's largest and most technologically advanced network infrastructure, accelerated breakthroughs in key core technologies, significantly enhanced the strength of the technology industry, and formed the world's largest, most active and most potential digital service market. With such a foundation and confidence, it is believed that in the future, China's telecommunications industry will continue to expand the door of opening up, so as to make greater efforts to attract foreign investment, consolidate the confidence of foreign investment in China, and improve the quality and level of foreign investment and cooperation.
Typesetting / Ji Jiaying
Photo/ Ministry of Industry and Information Technology of Oriental IC
Source/"IT Times" official account vittimes
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