CASE STUDY:
VODAFONE TURNS EAST
International Management – Professor: Dr. Skarmeas
Tsolis Angelos,Vidali Eirini,Boula Alexandra,Chatziorfanou
Georgia,Danoglidou Ioanna

CONTENTS
• Case Study Abstract
• China’s entry into the WTO and the impact on Vodafone
• The impact on foreign telecommunications investment
• The factors that have inhibited Vodafone’s investment
• China Unicom joint venture with SK Telecom
• The advantages, challenges and effectiveness of the strategy
• Recommendations for China Telecom

CASE STUDY ABSTRACT
• Reconstruction of China’s telecommunications sector
• Before entering the WTO (2001), the market was protected from foreign
competition.
• Vodafone’s entry into the Chinese market
• Response of the Chinese telecommunication sector
• Benefits and challenges brought to the domestic firms

CHINA’S ENTRY INTO THE WTO AND THE IMPACT
ON VODAFONE
• Equity alliance with CMHK
• Partnership with SmarTone
• Advancements in product and research development
• Access to millions of subscribers
BUT…

THE FACTORS THAT HAVE INHIBITED
VODAFONE’S INVESTMENT
• Open policies further to increase investment
• Barriers that limit market access:
1. Enactment of a comprehensive telecommunications law
2. Establishment of a fair telecom regulator
3. Foreign investors are obligated to form partnerships with Chinese companies
4. Telecom equipment certificate process is time consuming and costly
5. 49% foreign ownership
6. The world’s highest capitalization fee
7. Resell license
8. Narrow definition of value-added activities license (e.g. PMRTS, VSAT)

THE IMPACT ON FOREIGN
TELECOMMUNICATIONS INVESTMENT
• Protected telecommunications market
• JVs between domestic and foreign firms
• Reluctance to loosen control
• Very low foreign investment

THE FACTORS THAT HAVE INHIBITED
VODAFONE’S INVESTMENT
• Open policies further to increase investment
• Barriers that limit market access:
1. Comprehensive telecommunications law
2. Independent telecom regulator
3. Joint Venture Requirements
4. Telecom equipment certificate process
5. 49% foreign ownership
6. World’s highest capitalization requirement
7. Resell license
8. Value-added activities

CHINA UNICOM JOINT VENTURE WITH
SK TELECOM
• Alliance with South Korean SK Telecom
• Korean SK Telecom which acquired “a 6.6 percent stake in China Unicom” (CIO,
2006).
• The goal of this strategy was to make China Unicom more competent against
CMHK-Vodafone

THE ADVANTAGES, CHALLENGES AND
EFFECTIVENESS OF THE STRATEGY
• Share resources and risk
• Cooperation, R&D
• Capital worth of U.S. $1 billion
• Lower commitment
• Past collaboration

THE ADVANTAGES, CHALLENGES AND
EFFECTIVENESS OF THE STRATEGY
• Different business objectives
• Different business cultures, management styles
and working relationships (Fortune,2011)
• Imbalance in the levels of expertise, assets and
investment
• Trust, transparency, and mutual understanding
between the participants PwC (2016)
• Loss of control
HarvardBusinessReview(2004)
Deloitte (2010)

THE ADVANTAGES, CHALLENGES AND
EFFECTIVENESS OF THE STRATEGY
• Trust, faith and clear flow of information and communication
• Continuous R&D regarding technology development and customer service
• Continuous reporting, tracking and testing of the products.
• Deloitte (2010) claims “Most JVs will end sooner than most managers expect”
• Harvard Business (2004): “more than 2,000 joint ventures and found that 53% of
them “had achieved returns greater than the cost of capital”

RECOMMENDED ACTIONS FOR
CHINA TELECOM.
• Study the market and the available suppliers
• Market segmentation
• R&D
• Build long lasting relationships with customers
• Increase product portfolio
• Untapped markets

REFERENCES
•
• http://www.vodafone.com/content/index/media/vodafone-group-releases/2000/press_release13_06.html
•
• https://books.google.gr/books?id=IsJGohvrKPQC&pg=PA92&lpg=PA92&dq=china+wto+vodafone&source=bl&ots=jOh8H78zl4&sig=MgwaosEXQBP5CFEtgmp1cNUQzXo&hl=el&sa=X&ved=0ahUKEwiJ9K6d5e7PAhVE2hoKHXIMAhUQ6AEIPjAE#v=onepage&q=china%20wto%20vodafone&f=false
•
• https://books.google.gr/books?id=ONvUCgAAQBAJ&pg=PA357&lpg=PA357&dq=china+wto+vodafone&source=bl&ots=ATY5mmZJeK&sig=F2S0Blh6OPrmEtZGAAveDgx02-0&hl=el&sa=X&ved=0ahUKEwiJ9K6d5e7PAhVE2hoKHXIMAhUQ6AEIUjAI#v=onepage&q=china%20wto%20vodafone&f=false
•
• http://www.intracen.org/itc/trade-support/wto-accession-implication-for-business/
•
• http://www.independent.co.uk/news/business/news/vodafone-in-pound17bn-move-into-chinas-mobile-phone-market-635797.html
•
• U.S. Department of Commerce International Trade Administration: (2010) :http://web.ita.doc.gov/ITI/itiHome.nsf/9b2cb14bda00318585256cc40068ca69/7a19947d610987658525788c0041ea3d/$FILE/telecom%20market%20snapshot-china.pdf
•
• http://www.nortonrosefulbright.com/knowledge/publications/137503/chinas-new-telecom-catalogue-comes-into-force-on-march-1-2016
•
• http://warrington.ufl.edu/centers/purc/purcdocs/papers/0201_Yu_Market_Perfomance_of.pdf
•
• CIO (2006:) http://www.cio.com/article/2445936/it-organization/korea-s-sk-telecom-to-invest--1b-in-china-unicom.html
•
•
• Fortune (2011) http://fortune.com/2011/01/28/how-to-crack-asian-business-culture/
•
• Harvard Business Review (2004) https://hbr.org/2004/02/launching-a-world-class-joint-venture
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THANK YOU FOR LISTENING!

QUESTIONS?