<\/p>\n<\/p>\n
China is a world leader in both imports and exports of ICT products and services. In fact, ICT makes up approximately 36.5% [6]<\/a><\/sup> of the country\u2019s total exports, and 32.1% [7]<\/a><\/sup> of its imports. Since 2008, the industry has grown by 12.5%, and is forecast to grow by 11% in 2010. China\u2019s main ICT exports, which make up over 61.4% of the total, are computer and communications equipment and electronic components. China\u2019s main imports, making up approximately two thirds of the total, are electronic components. Value-added services have become a high-growth area, and are expected to become the hallmark of future success in this industry.<\/p>\n ICT is one of the key enabling technologies that has applications in a wide range of sectors within China. The Chinese government realizes the enormous value and potential of this industry, and has made its continued growth a priority. As such, a new governmental body, the Ministry of Industry and Informational Technology (MIIT), an expansion of the former Ministry of Information Industry, was created in March 2008 in order to encourage development of the ICT sector. MIIT is helping modernize industry by helping shift China\u2019s focus from industrialization to informatization. The government has also implemented favourable taxation policies to stimulate R&D investment.<\/p>\n China\u2019s primary ICT clusters are located in Beijing\/Tianjin, the Yangtze River Delta, consisting of Shanghai and its surrounding cities, and the Pearl River Delta region, consisting of the Shenzhen-Guangzhou-Zhuhai corridor. (see Figure 1.) Secondary centers are also located in Sichuan (Chongqing and Chengdu) and Shandong. <\/p>\n Figure 1: ICT Clusters in China: [8]<\/a><\/sup><\/p>\n Hong Kong,\u00a0a\u00a0Special Administrative Region of\u00a0the Mainland China, has one of the most liberalized and sophisticated telecommunications\u00a0markets in the\u00a0Asia region.\u00a0 Its regulatory system is independent from Mainland China. There are no foreign ownership restrictions in Hong Kong. Currently there are ten fixed-line and five mobile operators serving a population of\u00a07 million\u00a0in Hong Kong.\u00a0\u00a0Hong Kong\u00a0has put in place substantial infrastructure which supports one of the world\u2019s highest penetration\u00a0rates of mobile phones (159%) and household fixed line services (95%). Despite the high degree of saturation, the Telecom\u00a0and Information Technology sector continue to attract\u00a0foreign players. Key growth drivers\u00a0of\u00a0Hong Kong\u2019s\u00a0ICT sector are its proximity to China\u00a0and\u00a0other South East Asian markets, its strong\u00a0IP right protection and legal system,\u00a0a highly liberalized market, and highly tech-savvy population. Many overseas firms\u00a0use Hong Kong as a test-bed for their\u00a0business development in Asia.\u00a0\u00a0\u00a0Additional\u00a0reports on\u00a0the\u00a0Hong Kong\u00a0market, which cover the\u00a0Telecom, Wireless Technology and E-Health\u00a0subsectors, are available on the Trade Commissioner Service website.<\/p>\n The enormous growth and speed with which the ICT industry in China has developed has brought significant gains to many, but also its share of headaches as well. Laws and infrastructure have not been able to keep up with the needs of new technology. In the telecom industry, for example, although the government and telecom carriers have been investing heavily in 3G, the market is already looking toward 4G technology. China has also yet to finalize the draft Telecommunications Law that has been in the approval process since 2001.<\/p>\n The protection of intellectual property rights is of constant concern for foreign companies. There is a considerable, although somewhat diminishing, risk of piracy, counterfeiting and reverse engineering in China. Although there are laws to protect IP rights, they are costly and time-consuming to enforce. A lack of experience in such matters has contributed to the inconsistencies cited in court rulings. Furthermore, it is very difficult to prove financial losses, figures which are necessary to bear burden of proof in court. For more information, we recommend referring to the \u201cRecommendations for Protecting Your Intellectual Property Rights in China\u201d document on the Trade Commissioner Service\u2019s website, www.tradecommissioner.gc.ca\/eng\/document.jsp?did=96027&cid=512&oid=32.<\/p>\n ICT in China is characterized by an uncertain and changing regulatory environment, with frequent changes to taxes, import duties, and trade policy. The registration process for new products may be prone to numerous and lengthy delays. In addition, the Chinese government is planning to make it compulsory for foreign manufacturers of digital household appliances and other items equipped with computing devices to disclose key information, such as the source code for their products. This move, strongly opposed by foreign enterprises, is seen as favourable treatment towards information technology products made or sold in China.<\/p>\n China has heavy restrictions placed on the internet and websites, with heavy-handed censorship, monitoring, and enforcement. Companies may become confused by conflicting regulations from overlapping government bodies. For example, both the Ministry of Culture (MoC) and the General Administration of Press and Publications (GAPP) claim responsibility for the regulation of online gaming, and require different permits for a company to operate. Telecommunications and broadcasting have also traditionally been regarded as two separate and unrelated industries, and are under the respective administration and supervision of two parallel government agencies: MIIT and State Administration of Radio, Film and Television (SARFT). The central government has strict regulations that prohibit the two industries to set foot in each others\u2019 areas, however, due to the rapid evolution of network technologies and the ever-enhancing degree of convergence of the two sub-sectors, the market requires their cooperation.<\/p>\n Although ICT in China presents many attractive opportunities, the market is not overly welcoming to outsiders. Strict barriers to entry in a highly competitive market make it difficult to a company to get established, and regulations which highly favour domestic firms make it difficult to stay. The State Council\u2019s Medium and Long-Term Plan on S&T Development (2006-2020) specifically encourages government involvement to produce domestically-produced innovations, in order to reduce dependence on foreign technology. This, in combination with government procurement policies which favour purchase of domestic products, only adds to the complicated business environment. However, companies which are in a position to share best practices and new technologies in areas the government is trying to develop may find lucrative opportunities.<\/p>\n Telecom\/Wireless<\/strong><\/p>\n The advent of 3G in China has changed the landscape of the telecom industry. China is now the target of choice for big players, and competition is fierce for handset makers to be able to partner with the best service providers. As of August 2009, there were 720 million mobile subscribers in China, an increase of 133 million (11.08 million per month) over the previous year. With penetration rates of 54.2% (below the international average, leaving room for growth), and the highest cell phone usage rates in the world, China\u2019s appeal to foreign companies is clear.<\/p>\n In 2009, each of China\u2019s three main telecom operators was granted a license for a different 3G technology. (see Table 1, below.) Together, these operators invested an estimated RMB 120 billion (USD $17.6 billion) in 3G infrastructure in 2009, and will continue to invest an estimated RMB 280 billion (USD $41 billion) in the near future. The government has also invested RMB 300 billion (USD $44 billion) to construct 160,000 new 3G base stations.<\/p>\n Table 1: Telecom Companies in China<\/p>\n
<\/p>\nHong Kong<\/h3>\n
2.\u00a0 Market and Sector Challenges<\/h3>\n
Sub-Sector Identification<\/h3>\n