BEIJING, Aug 8 Asia Pulse - China's Ministry of Information Industry recently issued a circular on strengthening administration of foreign capital in value-added telecommunications business.
The circular says that overseas telecom businesses must apply for permits in investing in China's value-added telecom and internet business, and are not allowed to enter the market by a roundabout way to evade the administration procedures.
According to a report on the Guangming Daily, the circular says that domestic telecom companies are not allowed to shift their telecom business licenses to foreign investors in forms of covert lending and renting, transfer, and reselling for profits, nor are they allowed to provide resources, grounds and facilities for foreign investors to illegally conduct telecom business in China.
It is reported that in order to have early participation of China's market and share the high profits of the telecom market, some foreign capital companies have taken large service providers in China as a springboard to enter China market by a devious way.
In fact the entry of foreign companies into China's wireless value-added market is not a new thing. In April of this year, a British cell-phone ring and game producer completed purchase of a Beijing-based service provider at a price of US$81.50 million. And a Spanish wireless value-added service provider has acquired two Chinese service providers, Sensky and Entel, at a price of US$140 million and US$90 million, respectively.
An industry expert pointed out that the circular is aimed at standardizing not banning foreign companies in operating telecom value-added business. China needs a more transparent telecom and internet market.
If overseas companies entering the market in a roundabout way to avoid the administration procedures, that would be hard for the government to conduct supervision and administration over the qualification of the companies.
(XIC) 08-08 1211
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