China Telecom to establish a Representative Office in Delhi
September 29, 2010

Following the welcoming response and high returns on investments Huawei and ZTE have received from Indian state telecom companies recently, China Telecom, the largest fixed line service and 3rd largest mobile telecommunication provider in the People’s Republic of China has announced plans of expanding into the growing Indian market.

The state run telecom to internet services provider is cooperating with three Indian telecom carriers – Bharti Airtel Ltd., Reliance Communications Ltd. and Tata Communications Ltd. to establish a cable connection between China and India. It is also in talks with India’s government to establish a Representative Office in New Delhi. China Telecom is keen to expand its presence in India through partnerships amid slowing growth in its home market.

“India is an important market….It’s a fast-growing country and it has very good prospects for economic growth,” Deng Xiao Feng, chairman and chief executive of China Telecom’s international arm, told Dow Jones Newswires in an interview. “We look forward to cooperating with major carriers (in India.) We’re not interested in buying a network or a stake (in India) but rather we want to provide a service by working with these carriers,” the executive added.

A representative office or Liaison Office in India is relatively quick and easy to set up and will effectively allow China Telecom Relatively, to represent the Parent Company in India, explore opportunities for the parent company in India (gather contacts, conduct market research), act as a communication channel between the parent company and associate in India and promote the export / import of  goods and services from/ to India.  In addition, the Liaison office can hire local and foreign staff, rent property and open bank accounts in India. However, a liaison office, like a representative office in China is not allowed to undertake any commercial, trading or industrial activity either directly or indirectly in India and as a result cannot show revenue earned.

Although bogged down by bureaucracy, corruption and mismanagement, China is looking towards India as the next biggest market for its products. Slowing sales at home, mean that large state firms with big coffers are interested in giving India a try. Attitudes within China towards India are changing. From being a neighbor that was once looked down upon and often considered insignificant, India’s market potential is now being lauded and everyone from Chinese equipment engineers to fashion brands are looking southwest towards India. Although the political environment tends to see-saw, proximity, a similar marketing culture and high returns are reasons why Chinese firms are keen on India. As trade and investments continue to grow amongst Asian nations, Inchin Closer expects several large state owned Chinese companies to come to India in the near future.

China Telecom mainly provides integrated information services including the fixed-line telephone, mobile service, Internet connection and applications services. By the end of 2009, China Telecom owned 194 million fixed-line telephone subscribers, 62.36 million mobile (CDMA) subscribers, and 61.75 million broadband customers. The total assets of China Telecom was 632.2 billion yuan. There are 670 thousands employees in total in China Telecom.

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