Now, they have found out it is not wise to build their own networks, with equity investment becoming the dominant form of tapping the benefits of the world's largest market in terms of subscribers.

China Mobile, the world's largest mobile operator, teamed up with Vodafone; China Unicom, a smaller competitor of China Mobile, formed a joint venture with SK Telecom from South Korea; China Unicom, the second-largest fixed-line operator, brought Spanish counterpart Telefonica on board as its largest strategic investor.

The only firm left for foreign investment among the top four operators is China Telecom, which has many large international operators pursuing it, such as Telstra, Japan's NTT and France Telecom.

"China is a very unique market: just like its economy, no other country has gone from having the most primitive communication tools to the most advanced telecom system in the world in such a short period of time," said Charles Yen, managing partner of China northern region with Deloitte.

Yi Mingyu, a senior analyst with CCID Consulting Co Ltd under the Ministry of Information Industry, agreed with Yen and said foreign investors and operators must have a realistic attitude when operating in the Chinese market.

Brightman from Deloitte said that when foreign investors come, they must find areas where they can add value, but Chinese operators are now already very strong and technologically is sophisticated, so the opportunities for foreign participants to have a dominant say are minimal.

One area in which they can offer value and attract Chinese counterparts is their international expertise, as Chinese operators are trying to expand to overseas markets and increase the share of value-added services for higher profits.

That is why Vodafone, Telefonica and SK Telecom have become strategic investors. Vodafone and Telefonica both have strong international businesses in Europe, Asia, and Latin America, while SK Telecom has rich experience in developing value-added services.

Brightman said new opportunities may arise with technological breakthroughs such as the third generation (3G) mobile communication system, which has a higher efficiency and a faster Internet connection speed.

China is expected to issue 3G licences very soon. What services operators bring to consumers will be the key to their success in this business.

Areas like cost efficiency and content on a 3G network may be something that foreign operators and investors should use to attract Chinese operators and consumers.

1

2

(For more biz stories, please visit Industry Updates)