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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 167

China Business Intelligence No. 167

Samsung Economic Research Institute Beijing Office

July 28, 2010

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Highlights:

I. Economy

Recently, China' s Commerce Administration announced the adoption of an Internet real-name e-commerce system. In July of this year, the Commerce Administration announced the "Temporary Supervision over E-commerce and Relevant Practices" policy. Under the policy, anyone involved in online transactions must provide their real names and addresses to Internet platform operators. This system is more realistic than the previous "Online Shopping Mall Business Registration" system. The real-name system is directly linked to online transaction tax, and is projected to effectively subdue the black market. Developed nations impose do not oppose such heavy taxes on e-commerce. Therefore, in view of the current lax supervision system, it is desirable for China to flexibly run the new tax policy from a macroeconomic point of view.

II. Industry

With the start of 3G services in China in full swing in 2009, competition among three major telecommunications companies ㅡ China Mobile, China Unicom, and China Telecom ㅡ intensified. China Unicom has maintained its strategy to focus on the high-end market, catering to rich customers. As a result, the company failed to attract those who want cheaper products, recording lackluster performance and lagging behind its rivals. It plans to reverse the situation in the 3G market. Expected cost reductions can contribute to attracting more subscribers. Based on a variety of handsets and quality network services, China Unicom is set to show better performance than its rivals.

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