Structural Reorganization in China
2 min readStructural Reorganization
The idea that China first began to deal with the challenges posed by the WTO in 2001 is a misconception，several years particularly within certain major industries，such as agriculture，finance（banking，insurance，securities），the automobile industry，and telecommunications.
The significance of announcing the plan to segment and reorganize China’s communication industry is not，therefore，the ultimate realization of a long-drawn reform.In my opinion，it heralds a whole series of reform plans.These plans have the common characteristic of cultivating vigorous market competition through readjustment within industry，and their purpose is to promote the development of various industries，as well as to help absorb the inevitable economics impact that will occur when overseas firms enter the Chinese market.In the coming years，the terms“segmentation”and“reorganization”will be the most frequently used and closely associated with the“WTO”.
Disappearance of a“Dinosaur”
On December 11，2001，the first day of China’s entry to the WTO，the plan to segment China Telecom was announced.This was the second plan of its kind since 2000，and even more stringent.It entails China Telecom’s capital and equipment in 10 northern provinces merging with two other Chinese telecommunications enterprises（China Netcom Corporation Ltd.，and China Jitong Netcom Corporation Ltd.），to form the China Network Communications Group Company（China Netcom）.China Telecom’s southern entities will be reorganized into a new company that will retain the name “China Telecom Group Company”.This means that six powerful communications enterprises（the other four being China Mobile，China Unicom，China Railcom and China Sat）will form new competitive matrix，and a large proportion of capital and equipment will be reallocated from the original China Telecom to other telecom enterprises.
The Ministry of the Information Industry is executing the segmentation，and since February，the reorganized companies have begun to appear one by one.Within this operation，two principles are followed.First，30 percent of the national long-distance telecommunications network will be reallocated from the original China Telecom to China Netcom.Second，the local telecommunications networkin ten northern provinces will also be reallocated from the original China Telecom to China Netcom.The new China Telecom is to retain local networks in 21 provinces in the south and the west.
