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5 White Paper on the Business Environment in China
Juniper and IBM continue to face challenges in China: in 2013” and has projected total sales exceeding 40 million
handsets in 2014. “Xiaomi’s handsets,” explains Reuters, “sell
Beijing has long mistrusted foreign technology com- for between $130 and $410, much lower than the $740 price
panies, and those concerns have been exacerbated tag for the least expensive iPhone 5C model or a Samsung
since [whistleblower Edward] Snowden rst revealed Galaxy Note II, which can retail for $570.”26
the existence of the NSA’s clandestine data mining
program in June. In the summer of 2014, Xiaomi surpassed Samsung as
China’s top smartphone vendor, according to Canalys, a mar-
“ is is all about China using its own technology, and ket research company, as the Korean smartphone maker strug-
China building leading technology companies,” said gles continued in the third quarter, faced with tough compe-
James McGregor, chairman for Greater China at con- tition from Xiaomi as well as the launch of Apple’s iPhone 6
sultancy APCO Worldwide. and iPhone 6 Plus. 42 At the same time, tech pundits all over
the world have been raving about the debut of the One, a
Although Beijing has not prohibited state rms from low-budget Android smartphone from Shenzhen-based start-
purchasing Western-made technology services and up OnePlus, tipped to be a game-changer because, unlike
equipment, the government has sent a clear message other Chinese domestic smartphone manufacturers, the One
to choose Chinese-made equipment rst, China-based is bent on conquering not just China but also, international
executives say.18 markets.43
Video game hardware, however, appear to be less contro- Also notable is the ongoing implementation of the 3G
versial. In 2013 the Chinese government “temporarily lifted standard in China, following an initial announcement in De-
a 14-year-old ban on selling video game consoles, paving the cember 2008 of a $40 billion investment in third-generation
way for Sony Corp, Microsoft Corp and Nintendo Co Ltd to infrastructure over two years. An update on the proliferation
enter the world’s third largest video game market in terms of of 3G capabilities came in April 2010, when the Ministry of
revenue.” Under the new rules, video game consoles manu- Industry and Information Technology reported that all cit-
factured by “foreign-invested enterprises”in Shanghai’s new ies above the prefecture level, most counties and towns, main
Free Trade Zone will be permitted to be sold on the Mainland highways and tourist destinations would eventually o er 3G
“after inspection by cultural departments.”19 connectivity following an investment in building more than
400,000 base stations totaling nearly $60 billion, up from the
Formerly the exclusive domain of grey-market importers, previously-reported $40 billion. ese investments aim to
game consoles are expected to face erce competition in the achieve 150 million 3G subscribers by 2011.27
mainstream from PC-, phone- and tablet-based games—all plat-
forms with which Mainland consumers are already familiar.19 is target was not met (or at the very least is highly im-
probable to have been met, as nal annual totals have not
Mobile handsets also gure greatly into China’s machinery been released at the time of writing); statistics released in Sep-
and electrical equipment manufacturing. It is reported that tember 2011 showed a total of 101.86 million 3G subscribers
560 million handsets were produced during 2007 (an increase nationally.24
of nearly 17 percent on 2006’s production)20 and with a do-
mestic market of 523 million users as of 2007.21 In August 2012, the Ministry of Industry and Information
Technology reported “1.072 billion mobile subscriptions [of
ere were reportedly 600 million handsets manufactured which] 193 million were 3G network service subscribers,” an
in the PRC over the course of 2009, of which 168 million increase of 64 million 3G accounts which places the three
were sold domestically.22 China Daily reported more than 106 mobile operators—China Mobile, China Unicom and China
million new domestic mobile phone subscribers that year, Telecom—at 72.1, 63.7 and 56.4 million 3G subscribers, re-
increasing the total to 747 million.23 By September 2011, that spectively.28
gure was reported as 939 million.24 Particularly notable is the fact that despite China Mobile
Although Korean conglomerate Samsung “is the biggest has approximately twice as many overall subscribers as China
Unicom, 3G subscription numbers between the two are neck-
smartphone vendor in China with sales reaching around 70 and-neck. Earlier this year a Forbes analysis admonished China
million units [in 2012],” it faces sti competition at the high Mobile for apparent complacency in the face of increasing
end of the market from Apple25and at more modest price competition for 3G users; the report also noted that “the
points from domestic manufacturers which are quickly gain- fact that China Mobile runs its 3G network on a proprietary
ing on international leaders in terms of execution and sophis- homegrown TD-SCDMA standard has proved to be a big
tication. deterrent for the carrier in securing smartphones compatible
with its network. Even the iPhone, which has already been
Xiaomi, one such rm, “sold 18.7 million smartphones
138
Juniper and IBM continue to face challenges in China: in 2013” and has projected total sales exceeding 40 million
handsets in 2014. “Xiaomi’s handsets,” explains Reuters, “sell
Beijing has long mistrusted foreign technology com- for between $130 and $410, much lower than the $740 price
panies, and those concerns have been exacerbated tag for the least expensive iPhone 5C model or a Samsung
since [whistleblower Edward] Snowden rst revealed Galaxy Note II, which can retail for $570.”26
the existence of the NSA’s clandestine data mining
program in June. In the summer of 2014, Xiaomi surpassed Samsung as
China’s top smartphone vendor, according to Canalys, a mar-
“ is is all about China using its own technology, and ket research company, as the Korean smartphone maker strug-
China building leading technology companies,” said gles continued in the third quarter, faced with tough compe-
James McGregor, chairman for Greater China at con- tition from Xiaomi as well as the launch of Apple’s iPhone 6
sultancy APCO Worldwide. and iPhone 6 Plus. 42 At the same time, tech pundits all over
the world have been raving about the debut of the One, a
Although Beijing has not prohibited state rms from low-budget Android smartphone from Shenzhen-based start-
purchasing Western-made technology services and up OnePlus, tipped to be a game-changer because, unlike
equipment, the government has sent a clear message other Chinese domestic smartphone manufacturers, the One
to choose Chinese-made equipment rst, China-based is bent on conquering not just China but also, international
executives say.18 markets.43
Video game hardware, however, appear to be less contro- Also notable is the ongoing implementation of the 3G
versial. In 2013 the Chinese government “temporarily lifted standard in China, following an initial announcement in De-
a 14-year-old ban on selling video game consoles, paving the cember 2008 of a $40 billion investment in third-generation
way for Sony Corp, Microsoft Corp and Nintendo Co Ltd to infrastructure over two years. An update on the proliferation
enter the world’s third largest video game market in terms of of 3G capabilities came in April 2010, when the Ministry of
revenue.” Under the new rules, video game consoles manu- Industry and Information Technology reported that all cit-
factured by “foreign-invested enterprises”in Shanghai’s new ies above the prefecture level, most counties and towns, main
Free Trade Zone will be permitted to be sold on the Mainland highways and tourist destinations would eventually o er 3G
“after inspection by cultural departments.”19 connectivity following an investment in building more than
400,000 base stations totaling nearly $60 billion, up from the
Formerly the exclusive domain of grey-market importers, previously-reported $40 billion. ese investments aim to
game consoles are expected to face erce competition in the achieve 150 million 3G subscribers by 2011.27
mainstream from PC-, phone- and tablet-based games—all plat-
forms with which Mainland consumers are already familiar.19 is target was not met (or at the very least is highly im-
probable to have been met, as nal annual totals have not
Mobile handsets also gure greatly into China’s machinery been released at the time of writing); statistics released in Sep-
and electrical equipment manufacturing. It is reported that tember 2011 showed a total of 101.86 million 3G subscribers
560 million handsets were produced during 2007 (an increase nationally.24
of nearly 17 percent on 2006’s production)20 and with a do-
mestic market of 523 million users as of 2007.21 In August 2012, the Ministry of Industry and Information
Technology reported “1.072 billion mobile subscriptions [of
ere were reportedly 600 million handsets manufactured which] 193 million were 3G network service subscribers,” an
in the PRC over the course of 2009, of which 168 million increase of 64 million 3G accounts which places the three
were sold domestically.22 China Daily reported more than 106 mobile operators—China Mobile, China Unicom and China
million new domestic mobile phone subscribers that year, Telecom—at 72.1, 63.7 and 56.4 million 3G subscribers, re-
increasing the total to 747 million.23 By September 2011, that spectively.28
gure was reported as 939 million.24 Particularly notable is the fact that despite China Mobile
Although Korean conglomerate Samsung “is the biggest has approximately twice as many overall subscribers as China
Unicom, 3G subscription numbers between the two are neck-
smartphone vendor in China with sales reaching around 70 and-neck. Earlier this year a Forbes analysis admonished China
million units [in 2012],” it faces sti competition at the high Mobile for apparent complacency in the face of increasing
end of the market from Apple25and at more modest price competition for 3G users; the report also noted that “the
points from domestic manufacturers which are quickly gain- fact that China Mobile runs its 3G network on a proprietary
ing on international leaders in terms of execution and sophis- homegrown TD-SCDMA standard has proved to be a big
tication. deterrent for the carrier in securing smartphones compatible
with its network. Even the iPhone, which has already been
Xiaomi, one such rm, “sold 18.7 million smartphones
138
