No Great Leap Forward - Take 2

Since GTF wrote about the complete lack of 3G phones in China in April, The Economist has weighed in on the subject. It reports that Jiang Xiayou, the executive vice-president of the Beijing Organising Committee, may have to go back to the International Olympic Committe to discuss its pledge to have a 3G mobile-phone network available in time for the games.

As we explained in April, the main reason for the delay is the goverment’s insistence on developing its own 3G standard - TD-SCDMA - which is not yet ready.

The problem has also been compounded by the pressing need to reorganise the domestic mobile phone sector, which has been heavily dominated by China Mobile at the expense of the other players. In this regard, the government’s hands are tied as all four of the major mobile players in China have gone public on the Hong Kong stock exchange and are now answerable to their shareholders.

We can’t help but agree with the Economist’s conclusion: Foreign investors looking at China often swoon at the country’s potential but are driven mad by its conflicting and heavy-handed policies. The state of the country’s telecoms industry, however, suggests that the Chinese government faces exactly the same problem.