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China Telecom is a dinosaur, huge but without vitality.

In the first half of 2006, China all together manufactured 212 594 000 mobile handsets, increased by 64.2% compared to the same period of 2005, and 6 094 000 PASs( personal access phones ), which decreased by 30% compared with the figure of 8 704 000 in the first half of 2005.

When recalling the changes of the past few years, the determination of the Chinese government to transform the telecommunications industry is plain to see, as are the results it has achieved. In 1998, the segmentation of China Telecom, known as the “dinosaur”, began to be discussed. At that time, this company monopolized almost all telecommunications business such as fixed and mobile telephones, satellite communications and paging services. Consequently there were frequent complains of poor service and inadequate supplies.

On December 11, 2001, the first day of China’s entry to the WTO, the plan to segment China Telecom was announced. This was the second plan of its kind since 2000, and even more stringent. It entails China Telecom’s capital and equipment in 10 northern provinces merging with two other Chinese telecommunications enterprises( China Netcom Corporation Ltd., and China Jitong Netcom Corporation Ltd.), to form the China Network Communications Group Company( China Netcom). China Telecom’s southern entities will be reorganized into a new company that will retain the name “China Telecom Group Company”.

The idea that China first began to deal with the challenges posed by the WTO in 2001 is a misconception, several years particularly within certain major industries, such as agriculture, finance ( banking, insurance, securities), the automobile industry, and telecommunications.

While foreign companies like Nokia, Motorola and Ericsson previously dominated the market in mobile phones, now more than 40% of the handset market belongs to local companies like Ningbo Bird, Nanjing Panda Electronics, Haier and TCL Mobile.

China Unicom, China Telecom and China Mobile have all listed on both the Hong Kong and New York Stock Exchanges and China Netcom, which has put off its listing on a number of occasions, was expected to follow suit before the end of 2004, China Railcom and China Satcom held only a 1.6% market share between them in 2003 and are not expected to list outside China any time soon.

This competition is set to intensify further as China continues to liberalize the industry, according to the rules of its accession into the World Trade Organization(WTO).

China boasts the largest number of fixed line telephone and mobile phone subscribers as well as the largest Internet service market in the world. By mid-2004 there were 310 million mobile phone subscribers and 299 million landline subscriptions figures when you consider that China’s telecommunications system was virtually nonexistent well into the 1980s.