Core Competencies and Competitive Advantage Case Study

China Telecom Corporation Limited: Late Mover Advantage with Service Innovation?

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Abstract:
How can a late entrant garner an advantage over the incumbents, especially in telecommunications industry? Would that be an even more daunting task if the incumbents (as the late entrant) happen to be government companies? Positioned to address these two issues in the backdrop of China Telecom’s late entry into the mobile phone industry in China, this case study can be used to debate on whether China Telecom would be able to slice a market share from the incumbents with its service innovation.

Chinese telecommunications industry is the largest in the world comprising of 600 million mobile subscribers and 360 million fixed-line subscribers. In 2008, to encourage healthy competition amongst state-owned telecom operators, Chinese government restructured the telecommunications industry. Three state-owned telecom operators – China Mobile, China Unicom and China Telecom Corp. Ltd., (China Telecom) – emerged as the final players. China Telecom, which enjoyed monopoly in the fixed-line telephone service market, also forayed into the mobile service segment, which is dominated by China Mobile. China Telecom, being a late entrant, is trying to expand in the massive Chinese mobile market by banking on innovations. But the question arises – can China Telecom enhance its competitive ability and overcome the late mover disadvantage by banking on service innovations.

Pedagogical Objectives:

• To critically analyse and understand the effects of reforms and restructuring on China's telecommunications industry since 1979
• To understand the landscape of Chinese Telecommunications industry in 2008 and analyse how all the players responded to the new opportunities and challenges
• To highlight the importance of service innovation in telecommunications industry and analyse how China Telecom showed relative progress despite being a late entrant into mobile telecom services in China.

Keywords : Chinese Telecommunication Industry, Late Mover Advantage, Mobile Phone Market, Mobile Services Market, China Telecom, Service Innovation, China Telecom Restructuring , Pioneer vs Late Entrants, 3G Technology, Subscriber Growth