Ties That Bind - Bay Area Council Economic Institute

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Ties That Bind
as global brands and entering the U.S., but that is several years away for all but the largest companies
and even then, political obstacles are likely to slow the process.
Internet Services
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No society, not even the U.S., has embraced the internet with the speed and scale that China has,
and Silicon Valley has been an integral part of the growth story. The PRC has 111 million internet
users, half of them with broadband service. Most are young, and use the Internet primarily
for messaging, online chat, blogs and gaming. By 2010, that number is expected to grow to 232
million, according to Shanghai-based iResearch, a market research firm.
China’s Internet Services Market Size
(in renminbi billions)
30
25
20
15
10
5
0
12.8
2004
18
2005
24.5
2006 est.
Market size increased
41% from 2004 to
2005, and it is
estimated to grow an
additional 36%
from 2005 to the end of
2006.
Source:
Analysis International
2006
Like many developing countries, China has leapfrogged conventional wire-line phone service due
to the high infrastructure costs involved, and focused development support on wireless. At the
end of April 2006 the PRC had 416 million subscribers, according to government figures, adding
59 million new subscribers—more than the population of Italy—in 2005, and 23.2 million in the
first four months of 2006. China is expected to spend $35–40 billion to deliver third-generation
(3G) wireless service nationwide in time for the 2008 Olympics, based on a newly developed
TD-SCDMA network standard for the country’s two state-owned wireless providers, China Mobile
and China United Telecommunications, plus wire-line provider China Telecommunications.
The carriers are expected to spend a combined $12 billion.