VietNamNet Bridge – Chinese network operators really want to expand their business to Vietnam and other South East Asian markets, but they are fearful of the cutthroat competition in the Vietnamese market.
While Chinese telecom equipment companies have been cementing their firm positions in South East Asian markets, their fellow countrymen in the telecommunication field dare not enter the markets because of the stiff rival in the markets, especially in Vietnam, according to China Daily.
Chinese big mobile network operators including China Mobile, China Unicom and China Telecom all want to penetrate the other markets in the globe, but many of the markets have become saturated, which makes it very difficult for a new comer to do business there, the newspaper has quoted Andrew Kitson, a senior analyst of Business Monitor International (BMI) as saying.
The analyst said the Lao, Cambodian and Vietnamese all have great potentials, but too many network operators have been operating there already, which have developed the infrastructure system very well.
The competition in the market has become so stiff that mobile network operators, while having to spend more money on advertisement campaigns and sale promotion programs, have to slash the service fees, thus leasing the sharp profit decreases. The stiff competition has pushed some of the players against the wall and they had to leave Vietnam.
The three big foreign groups had to quit the games after a long period of struggling to survive in the market. They are Swedish Comvik, which was the first foreign telecom investor in Vietnam and the first which left Vietnam, South Korean SK Telecom and Russian VimpelCom.
Therefore, BMI believes that Chinese network operators should only seek their opportunities in Myanmar, a newly emerging market. Meanwhile, there is no more opportunity in the markets of Laos, Cambodia and Vietnam, and it would be very risky to invest in there.
Meanwhile, Huawei, a Chinese hardware product supplier, has been very successful in the Vietnamese market. It has become a big partner of nearly all the biggest mobile network operators in Vietnam, supplying telecom equipment to the Vietnamese big guys.
Following its great success in Vietnam, Huawei has revealed its plan to launch 400,000 smart phones into the market. If it can sell 400,000 products in 2013 as planned, it would account for 5 percent of the domestic smart phone market share.
Chinese telecom groups also nearly don’t have opportunities in the markets of Indonesia, Malaysia, Thailand and the Philippines – the developed markets with very stiff competition, which is being controlled by domestic and regional companies.
In related news, President of Russian Alltech Group paid a courtesy visit to the Vietnamese Minister of Information and Communication Nguyen Bac Son when he visited Russia and Belarus in mid-May 2013. The group’s president expressed his willingness to make investment in Vietnam to develop the infrastructure for the new generation 4G network, according to Buu Dien newspaper.
Meanwhile, the Australian Telstra telecom group opened a new office in Singapore in late April 2013. Zdnet website commented that the office opening was a part of the group’s big plan to expand its business to Asia, with Vietnam being a targeted destination.
The website quoted David Thodey, Telstra’s CEO, as saying that the group does not intend to join the bid for an operation license in Myanmar, the market that it does not understand well. Instead, it is eyeing Korean markets, including Vietnam.
Compiled by C. V