1. A UK Trade & Investment Mission to China and Korea Wireless Telecomms in China & Korea Industry Overviews Walter Tuttlebee Mobile VCE

2. A UK Trade & Investment Mission to China and Korea Brief Industry Overviews Topics National Priorities Government Players & Research Bodies Telecom Operators & Manufacturers Academia Interactions – the national ecosystem Firstly China, then Korea

3. A UK Trade & Investment Mission to China and Korea China Changing Priorities - From Little Red Book to Little Red Phone… (Sculpture in the team’s Hong Kong hotel) Industry Overview

4. A UK Trade & Investment Mission to China and Korea Industry Overview - China Perspective… “In October 1983 … a conference of policy leaders in Beijing … called on China to study the concept of ‘The Third Wave’, as introduced in our book by that name” “Since then top Chinese leaders … have strongly supported the idea that … China should simultaneously (ie alongside classic industrialisation), and as rapidly as possible, try to build a knowledge intensive economy” Extracts from Revolutionary Wealth, Alvin & Heidi Toffler ‘The Third Wave’ was published in 1980 and was a highly prescient forecast of the digital economy we are still only just entering 1 st wave – Agricultural, 2 nd wave – Industrial, 3 rd wave – Information revolution

5. A UK Trade & Investment Mission to China and Korea Industry Overview - China National Priorities in Telecom Teledensity growth - from 1% (1990) to 63% (2006) 2002: The largest single geographic telecoms market Key Imperative: Economic and Technical Independence National Priorities: (as described by MII in 2004) 1 st Provision of communications services - to facilitate economic and social growth 2 nd Growth of indigenous industry - to reduce reliance on imports 3 rd Development of own technology - to reduce IPR costs and to create export opportunities

6. A UK Trade & Investment Mission to China and Korea Industry Overview - China Relevant Government Agencies Ministry of Information Industries – MII Provides strategic direction to industry, with responsibility for industry policy, regulation & spectrum management Ministry of Science & Technology – MOST Responsible for development of China’s science & technology base, overseeing the 863 programme, including FuTURE State Administration of Radio, Film & Television – SARFT Regulates and controls broadcasting and content provision National Development & Reform Commission – NDRC Higher level than the ministries, the NDRC develops national economic and social strategies - such as the 5 year plans – which determine the framework within which MII, MOST & SARFT must operate

7. A UK Trade & Investment Mission to China and Korea Industry Overview - China Research Bodies CATT– Chinese Academy of Telecoms Technology ‘Hard’ – product related – research Eg parent of DaTang Telecom, pioneer of TD-SCDMA CATR – Chinese Academy of Telecoms Research ‘Soft’ research – analysis & advice Eg responsible for the 3G trials in recent years ‘Independent’ Research Bodies Eg SHWCRC – Shanghai Wireless Comms Research Centre, independently operated, but with well-coordinated backing and support from the state, the local Government, ministries, universities, etc,

8. A UK Trade & Investment Mission to China and Korea Industry Overview - China Telecom Operators China Mobile China Unicom China Telecom China Netcom China Satcom (smaller player) China TieTong (smaller player) (previously China Railcom) The State has control and majority ownership of all the companies The companies are also financed through the Hong Kong stock market – eg Vodafone owns a few % of CMCC A “reshuffle” has been widely expected now for ~3 years

9. A UK Trade & Investment Mission to China and Korea Industry Overview - China Infrastructure Manufacturers Huawei, ZTE, Datang have emerged as the major players Integrated – providers of infrastructure & handsets, often using predominantly their own in-house designed chipsets Huawei Employee ownership – unusual Export focus on the West Rapid recent growth in export sales $8bn in 2005 ZTE Export focus on developing nations DaTang Pioneer of TD-SCDMA, poised for payback & growth

10. A UK Trade & Investment Mission to China and Korea Industry Overview - China Handset Manufacturers Global Handset Market Size in 2006 ~ 1bn units of which 450m were made in China A Changing Scene 2004 – proliferation of local handset manufacturers Reflecting restricted access to local sales channels, especially in the Mid and West of China Recently, the international majors have increased local production, aggressive brand promotion & improved distribution China Handset Market Size in 2006 ~120m, of which Major international brands ~70% Local brands ~30% - no company >5% - many companies 1-3% Partnerships eg TCL-Alcatel, Bird-Sagem …and 30m (?) ‘copy’ phones !

11. A UK Trade & Investment Mission to China and Korea Industry Overview - China Universities A few very strong Universities in telecoms Funded by MOST through the FuTURE programme: Future Technology for Universal Radio Environment Fed into the 3G TD-SCDMA Feeding into the ITU 4G standardisation process Coordinated collaborative and competitive programme Long Term 10 year sustained funding Universities work with industry Supplying technology (esp to Chinese companies) Learning (eg from foreign companies)

12. A UK Trade & Investment Mission to China and Korea Industry Overview - China Interactions – An Effective Ecosystem A 2004 Perspective

13. A UK Trade & Investment Mission to China and Korea Korea A view of Seoul from the surrounding mountains Industry Overview

14. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea National Priorities in Telecom Key Imperative: Exports ICT is 45% of Korea’s Export Income ICT, esp. telecoms, has driven Korea’s rapid economic growth A Coordinated National Strategy – IT 8-3-9 8 new services 3 new infrastructures 9 economic growth engines (technologies) A 5 year plan 2002-2007 Close industry-government collaboration to define & deliver Specific itemised public-private funding commitments, broken down by technology, by year, etc With specific result targets – eg ICT export goal for 2007 etc

15. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Relevant Government Agencies Ministry for Information & Communications – MIC Works closely with industry (and ETRI), with responsibility for industry policy, regulation & spectrum management & future evolution Experienced, technology-literate, leadership Very active export promotion – Korea as a global testbed

16. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Research Bodies ETRI – Electronics & Telecommunications Research Institute Founded in 1976 2,300 staff Wireless communications a core focus Claims to have spun out over 200 companies Close links with Government (MIC) Close links with industry – technology transfer (eg WiBro)

17. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Telecom Operators Wireline – KT (93%), Hanaro Wireless – SKT (51%), KTF (32%), LGT (17%) Mature, technologically advanced & saturated market

18. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Infrastructure Manufacturers Samsung, LG Integrated – providers of infrastructure & handsets, often using predominantly their own in-house designed chipsets Built their business on CDMA Diversifying effectively into 3G Strong R&D (esp Samsung)

19. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Handset Manufacturers Serious global players, competing highly effectively Built the business on CDMA in the 1990s Diversified effectively into GSM High-end phones – fashion leaders, technology leaders World leaders now in 3G, HSDPA, Mobile TV handsets Samsung – world #3 (4Q 2006) LG – world #5 Pantech Curitel – world #7 Supplier to Verizon, Disney Mobile Recent expansion has caused cashflow problems

20. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Universities A number of strong Universities in telecoms Well linked into the global academic network Well connected with ETRI & Korean Industry Undertakes funded research for both

21. A UK Trade & Investment Mission to China and Korea Industry Overview - Korea Interactions – An Effective Ecosystem A 2004 Perspective

22. A UK Trade & Investment Mission to China and Korea Industry Overview – Common Features Despite major differences between them… Both countries have clearly articulated national priorities, reflected in strong industry ecosystems Both countries make effective use of University research, pulling it through to trials and commercialisation Research Institutes also play an important role …now let’s look in more detail ➱

23. A UK Trade & Investment Mission to China and Korea