Travelogue: China - November 2007
1. Synopsis
The fact that this was my third trip to China in twelve months demonstrates that it is becoming an increasingly interesting place. This time we started in the capital of Yunnan Province, Kunming, and proceeded from there to Dali, Lijang and Zhongdian before going to Beijing. The trip coincided with the 17th Party Congress of the Chinese Communist Party, where the policies for the next five years will be laid down. Slow political progress and fast economic progress were the outcomes. Telecommunications was not a particularly hot issue but nevertheless, in and around the Congress, interesting facts, figures and policies could be picked up.
2. Travelling into Regional China
Travelling within China is becoming more and more of a problem. The airline system is over-used and under-staffed. Flights can simply be cancelled without notice and this is followed by a wild scramble at the airline desk, with 400 people trying to change their flight and only one airline staff member behind the counter.
Anyone who has travelled to China would know that the Chinese are not patient people, and the battles that take place at the desk are often most unpleasant. This reinforces the advisability of including a local guide in your itinerary, even if you are a seasoned traveller.
But, putting all that aside, the highlight of this trip to China was that we travelled beyond the east coast where our business contacts are.
This time we went to the province of Yunnan in southwestern China. Starting from the capital, Kunming, we journeyed to Dali, Lijang and Zhongdian (known in James Hilton’s novel Lost Horizons, as ‘Shangri-La’). The altitude in the country we covered varied between 2,000 and 4,000 metres, with many snow-capped mountains – a stunning environment. This was the first trip to China where we enjoyed a clean environment and clear skies; at the same time we heard on TV that Beijing and other cities on the east coast were experiencing shocking pollution, due to fog.
In Yunnan, it’s the people who make this province very special indeed. It is the home of 50 of China’s 56 ethnic groups and the mix of cultures is unique. I was surprised and impressed at the enormous effort that goes into maintaining the traditions, languages and cultures of these communities. China has been unified in way or another for more than 2,000 years and yet the old cultures are still well and truly alive. The people are very proud of their culture and heritage and they are supported in this by the federal government.
And, with the exception of the Tibetans, the various groups seem to be quite happy to live under the Chinese umbrella.
2.1 Catching up with the China Boom
My first impression of regional China was similar to what I felt when I visited China five years ago, after an absence of 15 years – absolute awe.
Kunming has a population of close to six million people and has the same metropolitan characteristics as the cities on the east coast. True, the pace is not as fast as on the east coast and developments might not be as glamorous. It is a bit more laid-back and there is, naturally, a more rural atmosphere. In general, however, the same increased prosperity is evident – lots of new developments and a great deal of progress in infrastructure, communications, personal income, etc. And the people, in general, appear happy.
But much smaller cities, such as Dali (three million people) and Lijang (only one million J) are showing similar signs. However, as the rest of the country is beginning to catch up with the east coast, the further we travelled the closer we seemed to get to the start of the China boom.
A good example of this was Zhongdian, a Tibetan town not far from Tibet proper. Most parts of the old city have quite recently been demolished and awesome new buildings have now risen from the ashes. These new buildings were either approaching completion or had just been finished.
I am not talking about a few new streets here. I am talking about the entire inner city! Streets and streets of new buildings, all in a modern yet definitely Tibetan style – very tasteful – and the whole development allows for at least 50 years of growth.
As I have said in previous reports on my travels in China, it is sometimes heartbreaking that people have to lose their houses to allow for progress. The reality, however, is that most of these houses are slums and, while I feel for the people, there is really no other way to improve the conditions of these very poor communities. People in some of these neighbourhoods live in absolute poverty, with appalling heath conditions; yet many are reluctant to move to modern multi-storey flats that are often a fair distance from their previous homes.
I must say that I have seen far more humanitarian poverty and misery in (democratic) India than I have observed in (communist) China.
Nevertheless the majority of Chinese people are very poor and this is at the same time China’s weakest point. The current sharp increases in energy prices, is hurting regional and rural China the most and this is where the majority of these poor people live. Most uprisings and revolutions in China have started in these areas.
Back to Zhongdian ….. the town is also a tourist destination and, here also, a significant part of the inner city has been rebuilt in the traditional Tibetan style. All buildings are in timber, beautifully designed, carved and painted, but, with the exception of one historic building from the Ming period, all these ‘old’ buildings are new. Again they are tasteful, not tacky, and with none of the trappings that some spoiled tourists look for. Local culture and tradition has been maintained, but good restaurants, coffee shops, tasteful craft are also available.
2.2 Telecommunications Rule!
Two blocks in the main drag of the modern town consist of telecommunications shops; commercially they dominate the main street. China Telecom, China Mobile and China Unicom are there, of course, but there are a dozen other smaller stores with mobile phones, MP2 and MP3 products. And, right in the middle, is the Telecommunications Hotel.
All the buildings are ultra modern in design and I would argue they look better than many telecoms shops in other parts of the world.
To return for just a moment to the local environment – Zhongdian is situated on top of a rugged mountain plateau 3,500 metres high. It is a harsh environment and in the suburbs on the outskirts of the new inner cities (500 metres from the glamorous telecoms shops I mentioned above), yaks, pigs and chickens own the roads.
3. Yu Hu Connected to the world
Travelling even further into the countryside we went on foot into the village of Yu Hu (Jade Lake). There are only Tibetan farms in this village. It is situated at the foot of the 5,600 metre high Yu Long (Jade Dragon) mountain. And through the middle of the village, just above the main street, which is continuously flooded by water coming down from the snow-capped mountain, runs a thick telecommunications cable.
With the help of our guide I had a conversation with a farmer who was walking out of his house as we passed by. He told us that he was 74 years old, had lived all his life in this 400-year-old village and was on his way to play a game of or croquet with his friends. The telephone had arrived in his village three years ago, and everybody also had satellite TV (35 channels). ‘I am connected to the world’ he said, putting his hand in his pocket and producing his mobile phone.
4. Tibetan Monks with PDAs
One of the highlights of our trips was a visit to the Songzanglin Lamasery of Tibetan Buddhism, the largest of its kind in Yunnan. I was completely blown away by what I saw that morning, the highlight being watching 400 monks in prayer, chanting in this ancient building. (I have written a separate account of this experience.)
We visited this sacred place on a sunny but cold October morning. Imagine a huge, cold, half-lit hall with shrines along the walls, lots of incense burning, huge statues of Buddha and, in the middle, those 400 red-robed monks sitting cross-legged on about 30 wooden benches, some with Tibetan firepots next to them to give a bit of warmth.
Yet, to my amazement, we saw several monks using PDAs, accessing the Internet and others sending SMSs from their mobile phones.
5. And everywhere, mobile connection
I would not say that we travelled into remote areas, but we certainly were in the country, between mountains as high as 6,500 metres. Yet we had reception everywhere we went, even in the fairly remote Padacuo National Park.
How is it, then, that where we live in Bucketty, between hills 300 metres in height, 100Km from Sydney, we have no mobile reception?
The conclusion I have come to is that the rest of the world hasn’t even begun to grasp what is happening in China. There is no point in talking about where China will be in 25 or 50 years’ time – it is already leapfrogging the rest of the world in many ways and the developments taking place there are all implemented with a long-term vision at their core. The infrastructure has been built according to a 25-50 year vision and, when fully employed and utilised, this will put the country ahead of many parts of the developed world, where most plans do not extend beyond the next quarter.
6. Hard to compehend the speed of progress
By any standard the developments in western China are as impressive as those on the eastern seaboard. However, within the spectacular Chinese economy wealth grows faster in the east than in the west. President Hu Jintao has spent a lot of time travelling in rural regions, demonstrating that the government is working hard to lift the economic standard in those areas also. This is a massive task, but progress has been made and many of the processes that have been put in place will deliver in future years.
This time, more than on my previous trips along the east coast, I witnessed the industrious nature of the rural Chinese people and the innovative solutions they apply to the many problems faced by them. This gives me great confidence in the overall development of the country.
While it is true that 80% of the rural population still has many decades to go before it will reach our level of living standard, I did not see any real poverty. Yes, there are beggars; but I saw more of them in New York than I saw in Beijing. And, yes, some of the work I saw people doing would be unacceptable in the developed world, but they are willing to take on all kinds of work to advance themselves and their families.
Everywhere in the countryside we saw farmers building new farmhouses, and most were very substantial, three-storey buildings. Cooperation between rural families is also helping communities to move forward – this, of course, is not dissimilar to the way communities in the developed world have moved forwards over the last 200 years or so.
While all the attention is directed at the east coast, the true strength of China rests in its rural economy. But this can also prove to be its weakness if the gap between the rich east and the poor west increases, and this certainly seems to be the trend at the moment. The lives of people in urban China are advancing far more rapidly than those in country areas. More work certainly needs to be done to improve the lifestyle of those hard-working rural Chinese people – they truly are the backbone of the country.
The 17th Congress (see below) did promise more progress in free education and healthcare services and this would greatly benefit the rural population.
From what I have seen during this trip these people deserve great respect for their hard work, often under extremely harsh conditions. However, we always received a big ‘ni hao’ (hello) back from them, generally accompanied by a big smile.
7. The casualties of progress
My conversations with these people confirmed what I had also picked up from official sources – that there is a great deal of injustice in regional China.
For instance, in Zhongdian some local people sold their houses for 300RMB ($50!!) to make way for expensive new buildings.
On the outskirts of booming regional towns, developers (often party members linked to the local government) force farmers to sell their land. When they are given, say, 30,000 RMB ($5,000) they think they are millionaires, only to discover that, with no new income they quickly run out of money. Often poorly educated, these people don’t realise that they have no economic future, as they can no longer farm and they find it difficult to find any other work. They may be forced to hand-hew rocks for roadworks, or else live from a barely existing social benefit system.
The federal government is addressing the is
8. 17th Party Congress
8.1 The Communist Party (Chinese Style)
The trip coincided with the 17th Party Congress of the Chinese Communist party. This 237-member presidium is setting the policies and directions for the next five years. It is a most interesting event and one of the very few opportunities for outsiders to get a glimpse of what is happening behind the often very secretive Chinese system of politics.
At a political level any discussion of democracy revolves solely around the selection of party delegates.
The political wheel, however, turns extremely slowly. It was suggested at the 12th Congress that some of the internal procedures should be opened up, creating a more competitive arena for the election of delegates. The subject was first mooted in 1989 and only now is some progress apparently being made.
The Communist Party remains the most influential organisation in relation to decision-making in every aspect of Chinese society and the Chinese economy. It therefore is no surprise that in a buoyant Chinese economy, where an awful lot is at stake, membership of the Party has increased more than 100% since the last Congress in 2002.
In all the Party has over 70 million members, representing 5.5% of the population.
8.2 Bureaucratic power breeds corruption
However, because of its influence and the relatively low level of democratic scrutiny a massive amount of corruption and even more serious criminal behaviour takes place everywhere in bureaucratic China.
A crackdown was launched in 2003, during which more than 110,000 party officials were investigated. As a result 2,500 were dismissed or demoted, 1,300 were disciplined and over 400 are under judicial investigation. The government hopes that this will encourage most of the others to lift their game. It is increasingly making the results of the crackdown publicly available, to send a warning out to others. However that was only the tip of the iceberg – corruption is so endemic in the Chinese system that change will only be achievable over a long period of time, and with a great deal of hard work.
In the current Congress selection process more attention is at last being given to investigating the candidates’ backgrounds, to avoid what is becoming a public embarrassment for the national leaders.
Corruption is also impacting heavily on the billion people in regional China. They are suffering from the day-to-day effects of the corrupt system, more so than in the cities; in the cities the negative impact of corruption is at least partly compensated for by the enormous economic growth that the Chinese city dwellers enjoy.
8.3 New Government - More of the same
At the 16th Congress Hu Jintao was elected President and, in accordance with good old Chinese tradition, now (five years later) is the time for him to consolidate his power base.
Before the 17th Congress had even commenced the jockeying for new positions had well and truly started and, as is always the case everywhere, the battle is between the traditional, more conservative forces and the new liberal factions of the Party (a battle that is also reflected within Chinese society).
The instigator of China’s current economic boom, former President Deng Xioping, is still enormously influential within the Party. His favourite, Xi Jingping (the Party boss of Shanghai) and Hu’s favourite Li Keqiang were both elected to the inner circle of nine – although it was rumoured that Hu would have preferred to bring this number back to the original group of seven.
Xi and Li are both seen as the president and premier. Xi is certainly a progressive leader, and he is a leader who will be able to do business with the rest of the world. He is very well-respected among the progressive factions of the Party, as well as overseas.
However, the overall outcome of this year’s Congress was very much ‘steady as you go’, ‘don’t rock the boat too much’ and a continuation of the current one-party system, now labelled ‘communism China style’. In this context the word ‘democracy’ was used many times.
The major outcomes of the Congress were:
· Increase government transparency
· Increase government accountability
· Fight corruption
· A serious approach to environmental protection
· Continuation of fast economic growth
· Political stability (one-party system)
9. Telecommunications
Telecommunications was not a particularly hot is
There were some interesting statistics in the Congress papers from the Chinese National Bureau of Statistics (NBS).
Table 1 – Telecoms Statistics 2002, 2006
| Service Statistic | 2002 | 2006 |
| Total business volume of postal and telecoms services | Y570 billion | Y1,532.6 billion |
| Business volume telecoms services | Y521.2 billion | Y1,459.5 billion |
| Fixed telephone subscribers | 214.2 million | 367.8 million |
| Mobile subscribers | 209.6 million | 461.1 million |
| Business volume SMS | 138.6 billion (2003) | 429.5 billion |
| Internet subscribers | 60.9 million | 140 million |
(Source National Bureau of Statistics)
In other data from NBS, over the same period long-distance calls increased by 150%.9.1 Internet
The government will retain its iron grip on the Internet as it says it wants to make sure that information technology serves the country’s development, and information deemed harmful should be circumscribed.
There was also a clarification regarding cyber-attacks – it is the hackers who should be blamed for this and not their countries. This clarification was, of course, a response to the blaming of foreign countries for recent cyber-attacks in South East Asia. China mentioned that its government computers have also been victim to cyber-attacks, in particular e-espionage.
9.2 Mobile
I think this is the fifth time in a row that I can report that no progress has been made regarding 3G developments in China. The industry has been waiting for this since 2004.
The official line is that the country wants to see a completely sustainable package in relation to 3G. It wants to see, not just technology, but also a good business case for it, and there is reluctance to is
They also pointed to 3G developments in Europe and North America, indicating that the business case for 3G has certainly not yet been proved.
Officials questioned whether the current 3G technology would be sufficiently robust to allow the industry to move successfully into new mobile data markets.
I certainly have some sympathy for these arguments. I, also, have consistently questioned the 3G technology and the business models that are currently deployed around the globe. However some of my colleagues in China argued that the position taken was simply a ploy to give the Chinese TD-SCDMA standard more time to develop, so as to allow the Chinese to develop their own system.
My comment here would be that if, after all those years of development, the Chinese still haven’t figured it out there must be something seriously wrong with the technology. Nevertheless, I wouldn’t be surprised if China were to take that development a step further and look at a 4G, rather than a 3G, technology. It looks as though the Chinese are going to keep us guessing for a while longer.
It also would be more difficult to launch the TD-SCDMA standard before the Olympic Games. In order to get some decent penetration, reasonable time would be needed to roll out such a service, and that time is certainly starting to run out.
With the relatively low costs for mobile data service there has been an explosion of new companies involved in this new industry. Some of these, such as Linktone, Kongzhong and Hurray, have even listed themselves on NASDAQ. According to NBS the total revenue of value-added services has now reached Y108.8 billion.
Another Chinese success story is Gnome, one of China’s largest electronic retailers. They began to sell mobile phones in 2002, and in that year sales reached Y5 million. In 2006 revenues stood at a staggering Y9.8 billion. They estimate that they will double this figure during 2007!
10. Media Laws
Interestingly, the Chinese government has indicated it will relax media laws. This will see Chinese media being allowed to become listed on the stock market. Considering the government’s obsession with media control this announcement comes as rather a surprise. While discussions have been taking place for many years, it was expected that, in order to maintain control, media companies would perhaps be split, allowing a tighter control over the content.
But, no. That will not be the case – and companies will be able to list their entire company. The first of a dozen listings are expected within the next two to three months.
The new laws will apply to electronic and printed media and even Government and Party websites!
The government rationale seems to be that through listings these companies can acquire more investment, which would allow them to expand and would, in turn, lead to an increase in the reach of government propaganda.
11. International Telecommunications and Digital Media Mission to China
As you know, I am very excited about the economic and social developments in China.
Over the last few years I have visited China five times and have made contact with several Chinese telecommunications and digital media companies, as well as with government representatives.
I have also organised a number of Roundtables in China. Given those contacts and experiences – and with a successful Broadband Mission to the Netherlands under my belt – I have made the decision to organise a 4-5 day telecommunications and digital media mission to Beijing in May/June 2008.
If there is sufficient interest in the media component, I intend to tap into my contacts. I have been able to build links with the Chinese media through the annual conferences the UNSW has organised for this group, where I have addressed them on the topic of new media developments.
Mission Topics
Telecoms
· FttH
· smart grids (BPL)
· WiMAX,
· 3G and 4G
Digital Media
· mobile content
· Internet media
· entertainment (IPTV, games, social networks)
· e-health
· e-education
The focus will be on visions, strategies, new trends and developments (non-technical).
My rough plan for the Mission is as follows:
On the eve of the event (in Beijing)
Reception/Official Welcome
Day 1 – Telecoms and Digital Media Services Roundtable
This would be a full-day Strategic Business Roundtable between the delegates and Chinese telecommunications and digital media companies.
I will give a presentation for the Chinese delegates and I envisage that some of our delegates will also present on the topics listed above. On the Chinese side, I envisage similar strategic presentations from companies such as China Telecom, China Mobile, China Unicom, from digital media companies within CCTV, as well as from the Chinese Government.
Day 2 – Telecoms and Digital Media Networking Day
On Day 2 I plan to organise a networking event.
For this I intend to invite some of our customers in China, plus other Chinese telecoms and digital media companies. If you book early I will try to organise some matchmaking, with the assistance of our BuddeComm’s sales and marketing partners in Beijing – but please be aware that this takes time. I intend to invite up to 50 selected Chinese companies, so this will be a very focussed and unique opportunity to make valuable contacts in China.
I will start this day with a presentation on the future developments of the topics listed above. This will be followed by 3-5 minute presentations from the participating delegates, as well as from the Chinese participants attending on that day.
Both days would include networking lunches and dinners.
I envisage a matched number of visiting and Chinese delegates on Day 1 and between 25-50 Chinese representatives on Day 2.
Site visits (including the Beijing Olympic Site)
There will be a program of company visits and I will also endeavour to organise a visit to the Beijing Olympic Site, with a presentation on the ground-breaking telecoms and new media aspects of those preparations.
Private arrangements
Obviously there will be plenty of opportunity for you to make individual plans and appointments. I am sure that either Austrade or BuddeComm will be able to assist you with your individual business requirements.
Information Day
Before the trip I am also planning to conduct a half-day information day on telecoms and digital media developments in China for the participating delegates. This will take place in Sydney, Australia. A copy of this presentation will be made available to delegates from other countries prior to the Mission.
Organisation and Costs
Depending on your initial reaction I will make a decision to proceed with this plan. We would need between 10 and 15 delegates. I estimate the costs of participation in the Mission at between $2500 and $3500 per person (Australian delegates need to add 10% GST).
Delegates will be responsible for their own travel and accommodation costs.
I will be employing a local secretary/guide who can assist delegates with their bookings and other needs. Based on my own travel experiences, I strongly recommend that first-time travellers to China use this option, or at least seek advice before making their arrangements.
Registration of interest
If you are interested in receiving further information and updates, please email me to register your interest in the proposed Mission, so I can keep you informed about the progress of this activity. Of course please fell free to pass this message on to others who you think might be interested.
Looking forward to your response
Paul Budde
12. Other Reports
China (annual report)
China - Broadband Market - Overview & Statistics
China - Convergence - Digital Satellite TV, Digital Terrestrial TV & iTV
China - Convergence - Triple Play & Digital Cable TV
China - Infrastructure - FttH and NGNs
China - Infrastructure - IP Networks
China - IPTV & Video Broadband Market in 2007
China - Key Statistics, Telecom Market Overview & AnalysisChina - Major Telcos - Overview & StatisticsChina - Mobile Communications - 3G DevelopmentChina - Mobile Communications - Voice and Data ServicesChina - Mobile Market - Overview & StatisticsChina - New Internet EconomyChina - Regulatory Environment
