Aeronautic Giants Leap into China

Foreign commercial satellite manufacturers and operators are seeking potential acquisitions and partners in China, as the nation's accession to the World Trade Organization (WTO) draws closer.

"China is such a huge and exciting market that we have been seeking to drastically increase our presence. Now it's high time," said John Stanton, president of Intelsat's global sales and marketing.

The comments came after China wrapped up its WTO talks last week and was preparing to become a full member.

China has promised to comply with WTO principles, which means there will be increased deregulation in the once tightly controlled aerospace industry.

Intelsat is an international satellite organization supplying services to 140 member countries. It became a private company in August.

"We are making serious plans to make a big investment in China either through acquisitions or in the form of a joint venture once we have the permission from the government," he said.

Officials from China's space industry authority, China National Space Administration, would not comment on when China would allow foreign acquisitions or the establishment of joint ventures in the aerospace sector.

The severing of the US-China cable last week, for the third time this year, disrupted Internet access for many users in Hong Kong and South China.

Intelsat used the event as an opportunity to stress its benefit to a large nation like China.

Intelsat's satellites succeeded in restoring services to over 20 million Internet users in China two days after a fishing trawler accidentally cut one of the undersea cables connecting China to the US earlier this year.

The Internet connection to China was cut again in March because of a "short circuit" and Intelsat again came to the rescue.

This time the company is prepared to help again, said Jodi Evans, a spokeswoman for Intelsat. The accidents have demonstrated how important satellites are in providing uninterrupted Internet services to China.

"Undoubtedly, there are abundant business opportunities for commercial satellite operators like Intelsat in China," she said.

China Great Wall Industry Corporation will launch Intelsat's APR 3 synchronous-orbit telecommunications satellite on a Long March 3II rocket in May 2002.

Industry analysts said this was evidence of the importance Western operators placed on Asia's growing Internet demand.

China is one of Intelsat's 10 biggest customers. Its domestic customers include China Telecom and Unicom.

Betting on the future

Analysts believe Intelsat aims to secure a leading position as a satellite services provider in the fields of broadcasting, corporate networks and broadband services.

China's 2008 Olympic Games and the possible inclusion of China's soccer team in the 2002 World Cup will provide tremendous opportunities for the company.

Intelsat garnered up to 70 per cent of the television broadcasting business during the 2000 Sydney Olympic Games.

Yao Gao, Asia-Pacific regional sales director of Intelsat, said the company will discuss with Chinese officials about becoming the major television broadcasting services provider for the 2008 Olympic Games.

The business scenario in China is defying the global downward trend in the IT industry, powered by robust economic growth at over 7 per cent in recent years.

"Satellite operators like Intelsat are going to see a tempting market in China as more multinational companies will come to China after it joins the WTO," said a Beijing-based telecoms analyst.

"Besides, as the number of Internet users and mobile phone subscribers increases, there will be a growing customer base for satellite operators in China."

Intelsat is an international communications company offering Internet, broadcast, telephony and corporate network solutions around the globe through its fleet of 20 satellites.

For nearly four decades, many of the world's leading telecommunications companies, multinational corporations and broadcasters in more than 200 countries and regions have relied on Intelsat satellites and staff for stable connections and a global reach.

"China has a large population, and considering the speedy growth of Internet users and the broadband access demand at present, we are very encouraged by the potential of the emerging market," Stanton said.

"We are not going to get involved in any direct business operation or sales here in China. Our role is much more like a retailer who relies on its local partner to market its products," he said.

Intelsat recorded revenues of US$1.1 billion last year, and had a net income of US$504 million. Business revenue from China was about US$18.5 million last year, he said.

The firm plans to launch 10 more satellites before 2003, half of which will replace existing satellites. The company will go public at the end of 2002, he said.

Alcatel joins the battle

Alcatel Space, the global space industry leader, is also beefing up its efforts to convince the Chinese Government that co-operation will help sharpen China's competitiveness in the aerospace industry.

Pierre De Bayser, vice-president of Alcatel Space, said his company was "very positive" about the prospects for China's market

"We hope to share information with China and form a long-term partnership to grow with China's space industry," said Pierre, who attended the China Satellite 2001 conference, held in Beijing from September 18 to 20.

The company is in talks with the Ministry of Science and Technology and the Chinese Academy of Space Technology (CAST), China's most established space research base for possible co-operation in the fields of Earth observation, meteorology, navigation systems and telecommunications, he said.

"We are still working on possible forms for collaboration. Until now we have been very encouraged because both sides have shown strong willingness to promote the ties," he said.

Besides technical co-operation, the company's ambitions include manufacturing satellite components in China for exports to other Asian countries like Japan, De Bayser said.

"China is very strong in the space industry, both in terms of space technology and the achievements that can be made. We can co-operate with each other to manufacture satellite components and export them to other countries like Japan," he said, referring to the booming market expected in Asia for commercial satellites in the coming years.

China and France signed the "Agreement of Co-operation on Peaceful Use and Study of Outer Space" in 1997, which was a key document for both sides in discussing and defining the long term co-operation programme for the space industry.

Alcatel Space says any plan to set up a satellite manufacturing plant will involve a huge investment and take a long time to gain permission from the government, he said.

"In particular, we are developing solutions to meet the demands of an emerging market like China for Internet and broadband (multimedia) services," he said.

Alcatel Space received 10 satellite orders last year, which gave it 27 per cent of orders for geostationary communications satellites around the world.

It is a leader in the emerging field of high-speed communications and Internet applications based on the support of its parent company Alcatel, one of the world's leading telecoms giants.

It is working in a close industrial partnership with all the biggest space industrialists.

(Business Weekly 10/01/2001)

In This Series

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Taiwan Investment to Be Encouraged after China's WTO Entry

Labor-intensive Industries Expected to Play Important Role

China's Air Passenger Volume to Grow by Four Times in Twenty Years

FM Spokesman on China's Entry into WTO

China's WTO Membership to Increase Int'l Investors' Confidence

Space Academy Marks Birthday

China and Europe Agree on Satellite Project

China to Develop New Rocket Satellites for Civil Spaceflight



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