China’s reorganisation of its telecoms industry opens the door for foreign companies to the world’s largest telecoms market, but government inertia and protectionism could keep the floodgates shut for now. The world’s biggest industrial overhaul has removed some uncertainty that had kept strategic investors at bay, and China’s telecoms operators are certainly hungry for more capital, technical expertise and marketing skill.

“There’s never been a better time for foreigners to get into the industry,” said Daiwa Institute of Research’s Marvin Lo.
“And on the Chinese side, they want the capital and knowhow that global firms will bring to the table.” At present, foreign telecom operators, such as Britain’s Vodafone Group Plc and Spain’s Telefonica SA, are confined to tiny stakes in the largest operators. The restructuring, announced recently, is aimed at boosting competition between operators, and could trigger billions of euros of orders for equipment makers like Ericsson Nokia, Nortel, Siemens and Motorola Inc.

Foreign companies, many of whom face slowing growth at home, are already queuing up. Qualcomm, SK Telecom and Singapore Telecom are courting the larger of China’s two fixed-line players in the hope an investment will cement future cooperation, media reports say.