bulletinen4_v2 .indd - Chalmers International Taiwan Office
asia bulletin no.4
Photo by Per Sandstrom
Letter from the Editor
Centered on Chalmers:
Fall Semester at the Asia Office
Start-up Of NCTU Europe
Southeast Asia News
Do It Yourself:
Do It Yourself:
From Rice Noodles to
Nice Outfit Most Important:
Impossible to Sell Ugly
Stuff in Japan
Business and Investment
Asia Bulletin no. 4
National Chiao Tung University
What is Chalmers Asia ?
Chalmers Asia (formerly CITO) opened
in March 2003 and is the result of a
bilateral exchange agreement between
National Chiao Tung University (NCTU)
and Chalmers University of Technology.
The Chalmers Asia office is strategically
located at NCTU, near Hsinchu ScienceBased Industrial Park and ITRI, Taiwan’s
most important industry cluster.
1001 Ta-Hsueh Rd., Hsinchu
Taiwan, 300 Republic of China
+886 (0)3 573 73 69
+886 (0)3 573 74 69
The purpose of Chalmers Asia
• Increase awareness at Chalmers
about the development in East Asia, with
focus on China and particularly Taiwan
• Support mobility of students and
staff between NCTU and Chalmers
Enhance Chalmers’ visibility in
Taiwan and the neighboring region
Currently, nine Chalmers students are at
NCTU, while ten students from NCTU
are studying at Chalmers. The opening
of an NCTU office at Chalmers this year
has strengthened the bilateral exchange.
Read more on page 6.
Did you know that Taiwan...
...has approx. 23 million inhabitants.
...has approx. 15 million scooters.
...has most mobile phone subscriptions per inhabitant in the world, on the average 113 subscriptions per 100 inhabitants.
...has one of the highest population densities in the world, 625 inhabitants/km2. (Sweden has 22 and India 328).
Cecilia Fu, editor
Letter from the Editor
Photo by Cecilia Fu
When I look through the window at the Chalmers Asia
office, I see green lawns with purple flowers, bamboo
trees swinging in the breeze, and trimmed hedges standing
proudly beside the pounds. This beautiful picture belongs to the
National Chiao Tung University in Hsinchu, Taiwan, where the
Chalmers Asia head office is situated.
National Chiao Tung University was founded in the suburbs of
Shanghai in 1896, at the suggestion from the Minister of Foreign
Affairs of the Ching Dynasty. The University was first named
Nanyang College. It was established to meet the urgent need to
introduce western civilization into China. The college initially
focused only on politics, law and translations of western books.
Later, by including new vocational programs, such as business,
electrical engineering, shipping management, and railway
management, the college played a major role in science and
engineering education in modern China.
After the founding of the Republic of China in 1912, the collage
expanded to three campuses: Shanghai Industrial College, the
Tang-Shan Industrial College, and the College of Management in
Railway, Post and Telecommunications. In 1921, the Ministry of
Transportation united these three campuses under a single name:
Chiao Tung University. In 1957, according to the recommendation
from the Ministries of Education, Communications, Economic
Photo by Cecilia Fu
Lake with trees inside NCTU
Main entrance at National Chiao Tung University, NCTU
Affairs, and National Defence, NCTU was re-established at its
present location in Hsinchu, Taiwan. After almost fifty years,
NCTU is now famous national wide, with a balance between
humanistic concern and technological advancement.
It is in this historical school, I proudly present this fourth bulletin
from Chalmers Asia. Here you will find interesting articles about
business and marketing in Japan and China, about one of the
oldest Science Parks in Taiwan, about technical development in
Asia, about events at Chalmers Asia during the fall semester and
The purpose of this publication is to gather information on the
development in East Asia and share it with people connected
to Chalmers, in order to increase the awareness of this region.
If you are interested in learning more about the opportunities
the Chalmers-NCTU collaboration offer, you are welcome to
contact our office. Taiwan might seem far from Sweden, but the
distance is shrinking as we are increasing our knowledge about
Centered on Chalmers:
Fall Semester at the Asia Office
The number of students working at the Chalmers Asia office at
NCTU in Taiwan is increasing and this semester we are nine,
six newcomers and three experienced representatives from last
spring semester. Some of us newcomers arrived two months
before school start to attend a language and cultural course
that made the big change of moving to Taiwan much smoother.
But still, there are a lot of new situations a summer course can’t
prepare you for. Baked under the sun, dazed by earthquakes
and almost swept away by typhoons, we have made it to the
Taiwanese late autumn with a more familiar climate to us Swedes.
With dryer air and lower temperatures, allowing you to put on a
jacket at nights, it almost feels like a Swedish summer.
Oskar Hagberg, editor
Photo by Jon Davidsson
her work with the exchange of students and PhD’s between
Chalmers and NCTU.
Oskar Hagberg, representative, is a student in Electrical
Engineering. Oskar is responsible for the technical and
economical survey, i.e. to make sure that this publication – the
Chalmers Asia Bulletin – is produced.
Per Sandström, representative, is a student in Electrical
Engineering. Per is part of the group responsible for the exchange
of students and PhD’s between Chalmers and NCTU.
Cecilia Fu, representative, is a student in Computer &
Science Engineering. Together with Oskar she is responsible for
the production of the Chalmers Asia Bulletin.
Charlotte Andreasson, representative, is a student in
Electrical Engineering. Charlotte is part of the group responsible
for the exchange of students and PhD’s between Chalmers and
Hugo Christiansson, representative, is a student in Electrical
Engineering. Hugo will continue his work with corporate
relations together with Anders Frick.
Anders Frick, representative, already has a Master of
Science from University of Linköping but will take a second one
at NCTU in Taiwan. Anders will work together with Hugo with
The assignment for the period
September 2004 – January 2005
From the furthermost right and clockwise: Charlotte Andreasson, Cecilia Fu, Oskar
Hagberg, Pontus All, Anders Frick, Per Sandstrom, Hugo Christiansson, Yan Tai So,
Yan Po So.
Representatives this Semester
Pontus All, Head of Office, is a student in Computer Science
& Engineering. As Head of Office it lies within his responsibilities
to represent Chalmers in contacts with NCTU, to be the main
contact to the President’s Office at Chalmers and to allocate
work among the Chalmers Asia representatives. Furthermore
he has the over-all responsibility for the economy of the office.
Yan Tai So, Deputy Head of Office, is a student in Computer
Science & Engineering. As Deputy Head of Office he assists
Pontus in his work as well as sharing his experiences from the
spring semester 2004 at the office.
Yan Po So, representative, is a student in Computer Science
& Engineering. Po will, together with Per and Charlotte, continue
• Chalmers Asia needs to maintain focus on promotion of
exchanges, including work with the double PhD-program.
• Chalmers Asia shall assist Chalmers’ and NCTU’s efforts to
increase the cooperation in research, particularly by facilitating
exchange of information about research initiatives and the
mobility of PhD students.
• Chalmers Asia is expected to further develop cooperation with
companies in a few selected areas.
• As a part of Chalmers international exchanges, Chalmers Asia
shall establish itself as a hub at NCTU for Chalmers students
in Eastern Asia (particularly Hong Kong, Tokyo, Singapore and
• The students are expected to make reports on developments in
Taiwan and Eastern Asia.
Major events during the fall
Photo by Anders Frick
• The office opened after the summer vacation and in order to
make the new group of representatives come together, a kick off
was held. In addition NCTU organized tours around the school,
the Science Park and downtown Hsinchu with the purpose of
familiarizing us with NCTU and its surroundings.
• In the beginning of October Chalmers Asia met the vice
president of Chalmers, Johan Carlsten and discussed several
topics concerning the student exchange.
• On November 5th, the University of Chalmers’ 175-year
anniversary was celebrated at the Chalmers Asia office. Around
one hundred students and specially invited guests participated
in the festivities. Many guests took the opportunity to ask some
questions about the student exchange between Taiwan and
Head of Office, Pontus All welcoming the guests to the 175-year anniversary
Photo by Anders Frick
• Chalmers Asia Corporate Relations has decided to help the
Gothenburg based company Unihoc to introduce the sport
Unihoc (also called floor ball or innebandy) in Taiwan. Unihoc
has provided all the equipment needed to arrange games and we
hope the Taiwanese students will welcome the sport.
• Between the 12th and the 17th of November, Chalmers Asia
had the honor to receive visits from Eva Walder-Brundin,
the head of the Asia and Pacific Department at the Ministry
for Foreign Affairs in Sweden; Agne Hansson and Holger
Gustafsson, members of the Swedish Parliament and Angelica
Mårtensson, Manager of International Exchange, International
Student Services at the University of Chalmers.
Many NCTU students dropped by the office during the 175-year celebrations.
Photo by Hugo Christiansson
• A social event was arranged at the 25th of November for the
Chalmers Asia members and the Taiwanese students who have
studied at Chalmers in order to strengthen the relationship. We
all had a pleasent evening together with Go-Cart and dinner.
• In December the NCTU students going abroad the following
year are invited to an information meeting where they will get
a presentation on Sweden and studying at the international
programs at Chalmers. The goal is to make Chalmers be a high
priority choice when the students chose schools in the beginning
Unihoc is demonstraded on a makeshift arena in the conference room.
Start-up of NCTU Europe
Pei-Chin Liu, Head of Office
On September 3rd 2004 NCTU Europe, an overseas office of
NCTU, was inaugurated by NCTU’s principal Chung at Chalmers
University of Technology. After three weeks’ preparation,
assembling furniture bought in IKEA, communicating with
different authorities concerned; we had an almost perfect
Roughly three months have passed since we arrived at Chalmers.
Our office is gradually coming in order. Close connections with
faculties and students in Chalmers give us the help we need
managing the office properly. We presently offer potential
exchange students at Chalmers useful information and connect
industry and academic sectors between Taiwan and Sweden.
For example, we have contacted some world-famous companies
from Taiwan, such as Acer and Evergreen, who are willing to
give presentations of their companies at Chalmers University of
Technology. Having activities like this is the best way to make
our technical performances known to Chalmers.
On November 11th, Chalmers’ education fair was carried out
at the Student Union. Along with education organizations of
different countries, we used this opportunity to provide useful
information to potential Swedish students who are interested in
going to Taiwan. Keeping contact with those interested students
and providing them with the latest news from NCTU is our
most important job. We try our best to make Nation Chiao Tung
University a popular choice.
All of us came through a period of adaptation and gradually
fell in love with this city – friendly, cute, clean, charming but
sometimes frozen. New interesting things cross our path every
day. Although we have to handle heavy schoolwork and affairs at
NCTU Europe at the same time, we know it is a rare opportunity
to gain experiences. As pioneers to establish the first overseas
office of National Chiao Tung University, we never forget our
mission and deeply believe that our office will progress step
by step. We hope any students who have interests to study in
Sweden grasp this chance tightly; this really is a wonderful place
and an experience we would never forget in our whole lifes.
Further reading and contact information:
Principal Chung and the NCTU Europe staff outside the new office.
NCTU’s principal Chung and Chalmers’ principal Sundgren shaking hands
Southeast Asia News
Taipei 101 Is Aiming For the Skies
Smart government strategy that make people pay taxes
Soon the highest building in the world will be inaugurated
If you take a close look at Chinese history, you will see that luck
and to be fortunate plays a big role. With this in mind and with an
expectation of making more stores to pay taxes, the Taiwanese
government has created a lottery, where every receipt contains a
unique lottery number.
Every store in Taiwan has become a lottery ticket distributor,
though the lottery tickets are given for free when you shop,
since the lottery number is stamped on the receipt. In this way
the government motivates the consumer to ask for the receipt,
which should increase the tax revenue.
The first price every other month, when the winning numbers
is announced, is two million NT-dollars, which corresponds to
around 450 000 SEK. The most common winnings are 200, or
dollars, and the
chance to win
is about 1/250.
At the end of this year the highest
building in the world will be
inaugurated, Taipei 101. It is a
gigantic construction never seen
before – even the elevators break the
world record with a maximum speed
over 60 km per hour. Equipped with
two-storey double-decker elevators, a
stabilisation system weighing 800 tons
and enormous quantities of stores
and offices spaces, Taipei 101 will become the first building in the
world higher than half a kilometre. Admittedly the CN Tower
in Toronto and some other buildings of TV tower type will
still be higher. As a building however, Taipei 101 is highest, 56
metres higher than the current highest building, the twin towers
Petronas Tower 1 and 2 in Malaysia.
The design and the specifications of the tower are based on the
figure 8, the figure which is the traditional fortunate number in
the Chinese culture.
Photo by Anders Frick
The Receipt Gives a Chance to Win
Photo by Anders Frick
More about Taipei 101:
Facts about Taipei 101
No. of storeys:
Parking spaces: 1 800
Karaoke – Everybody’s Favourite
What does a Taiwanese do on his/her spare time? The answer is easy. Three of the most common activities are: working,
sleeping and singing karaoke.
There are karaoke machines everywhere – on town, at people’s home, on buses, at
workplaces and at schools.
Photo by Anders Frick
But, wait a minute. The question was about spare time, how could “working” belong
to this category? Well, the thing is that you don’t want to be less hard-working than
your colleagues. It is important to arrive early and leave late from your work – the
bosses appreciate it. If you are for example doctoral student, it is expected to show up
at your lab one day also during the weekend. The other day of the weekend is then
spent sleeping, in order to have enough energy to manage the rest of the week.
The last of the three most common spare time activities is of a more pleasant
character – especially if you like listening to your friends singing loudly and off tone.
It is the “everybody can sing”-theme and since the karaoke machines automatically
add echoes to your voice, it sometimes sounds really nice when people sing...
Do It Yourself:
Rice noodles are popular food in many countries in south eastern
Asia. They are often thin and almost transparent.
In order to make your own rice noodles, you will need rice, water
and patience. First you should wash the rice, and then grind it to
rice flour. Make dough of rice flour and water, and try to work
in as much rice flour as possible. Finally the dough should be
stretched out to something looking like noodles, which is done of
consecutive stretching and folding of the dough. The more times
you stretch and fold, the thinner the noodles will get.
To make your own rice noodles, you do not need any expensive
tools, but it requires patience. It is much easier buying the
noodles in a supermarket.
Do It Yourself:
Since the transistor was invented in 1948, the development of
semiconductors and integrated circuits has been extremely
fast. The transistor, once of the size of centimetre, is nowadays
reduced to 80 nm (less than one thousand of a human hair).
In order to manufacture an integrated circuit, you will need a
semiconductor material, a material where the conductivity could
be changed with doping and electric field. Normally monocrystal
silicon is used, and by using two dimensional methods the circuit
is built up layer by layer to give the right properties. Important
methods are deposition, photolithography and etching. First
deposition is used to add some material to the IC, and then it
will be removed on all places where it is unwanted. This is done
with a photo resist, a material that hardens if it is exposed. On
the non-exposed surfaces it could easily be etched away.
The process with deposition and etching could be repeated 20
times before the IC has got the right properties.
A fab for producing integrated circuits cost about 1 000 000 000
USD. It is much easier and cheaper to buy the circuits in the
stores than to make them yourself.
From Rice Noodles to Silicon Wafers
Photo by Hugo Christiansson
Once upon a time on a small south sea island, in a small city,
they were known of producing the very best rice noodles.
It could be the history of Hsinchu, a town in Taiwan with a
population of 500 000 . For generations, it has been famous for
producing the best rice noodles, but since the opening of the
Hsinchu Science Park in 1980 the business of silicon wafers has
become a much more important business for the city.
25 years ago, most of it was bamboo forests, but nowadays more
than 100 000 people are working in the science park. In the
former rice noodle town, almost 70 percent of the world silicon
foundry capacity can be found and other branches as computer
peripherals and flat screens are expanding business areas. 90
percent of all wireless network equipment is nowadays “Made
in Taiwan”, as well as 80 percent of all mainboards.
The largest company in the Science Park is TSMC, Taiwan
Semiconductor Manufacturing Company. It was founded to
produce silicon chips to a much lower price than what was
possible in US or Europe. The companies establishing in the
science park were also attracted with special tax rebates and
duty-free import and export.
Nowadays there are almost 400 companies established in the
600 acres science park, and most of them are true Taiwanese
companies that have been growing up beside the international
giants. Many of the company names are not at all known in
Europe, but the products from Hsinchu are likely to be in your
Outside the science park, the streets are narrower and not that well planned, but in
the streets in Taiwan you can find cheap and delicious food.
Photo by Anders Frick
The largest company in Hsinchu Science Park is TSMC, and is a foundry
specialized in producing processor chips. In the science park everything seems to
be well planned and clean, which is not always the case for downtown Hsinchu.
The rapid development of the Hsinchu Science Park was not
taken for granted in the beginning of the 80’s. It is easy to see
this, if you leave the well planned and clean science park and
head downtown. The city has simply not kept up with the fast
growth, so the small streets leading from the city centre to the
science park are clogged every day. In the morning, scooters and
cars are heading for the science park and in the evening and late
night they are going in the opposite direction.
In Taiwan, the working days are long, and there is often no
such thing as compensation for overworking. The science park
in Hsinchu is surely no exception, and many people work more
than 12 hours per day.
- In Taiwan it is important to do a good impression at work, and
it means among other things that you do not leave your office
before the boss, says PeiYi Cheng, an engineer at TSMC.
Never leaving office before your boss is an unwritten rule that is
used in many companies in Taiwan. If your boss does not have a
life beside work, you will not get it either...
Even if the working days are long, the salaries are not high
compared to US or Europe. A salary for an engineer is about
1000 USD, but the expenses for living are much lower in Taiwan
than in Europe. The taxes are very low, which gives Taiwanese
citizens a number 16 on the world ranking of purchase power.
Many of the companies in the science park have stock shares for
their employees, so that all employees get a share of the revenue
if the company is profitable. In Europe it is very uncommon
with bonuses except among the top management, and it is
normally just a matter of some few per cent of your yearly
Photo from www.gio.gov.tw
salary. The system in Taiwan was born when the science park
was newly opened and needed experts. Many of the experts were
found among Taiwanese engineers working in Silicon Valley in
California. In order to attract the skilled engineers, they could
not offer very high salaries, but they could promise bigger part
of the revenue. During a “good” year it could give the employees
just as much in bonus as in ordinary salary and in exceptional
years even more.
Photo from www.gio.gov.tw
Comprehensive technological plans and high-caliber manpower resources have
transformed Taiwan into one of the world’s largest producers and exporters of IT
The Hsinchu Science-based Industrial Park is home to over 300 high-tech
companies engaged in telecommunications, optoelectronics, biotechnology, and
other IT products. (Courtesy of the Synchrotron Radiation Research Center)
Since the 1980’s, the number of companies in Hsinchu Science
Park has been increasing every year, but the question is how far
it could continue. During the recession in IT-industry in 2000
the pressure was decreased, but there are still companies waiting
to establish in this and other science parks in Taiwan. The big
threat to towards the science park comes from China, where the
labour is much cheaper. Many companies choose to invest in
one of the 70 science parks built up in China, to benefit of even
cheaper labour. What once was the reason of establishing in
Taiwan – low cost for labour – is nowadays a reason for moving
away. The Taiwanese companies are approaching this topic in
different ways. Evidently they must provide better quality than
their Chinese competitors, but other trends are to build up own
brands and try new hot markets, as flat panel display technology.
Taiwanese brands are not famous in Europe, but companies like
BenQ, Acer and D-Link are trying to change the way we see
Taiwanese brands. It may be enough to keep the science parks in
Taiwan busy for a long time.
The Chinese name of Hsinchu. Good to remember if you want to get off the right
exit on the highway. Although, nowadays, most traffic signs in Taiwan also has the
English name written.
Mifen means rice noodles and the rice noodles from Hsinchu is famous all over
Nice Outfit Most Important
Impossible to Sell Ugly Stuff in Japan
meters. One of the engines for promoting RFID products is the
US chain Wall-Mart, which has been using January 1, 2005 as a
deadline for their key suppliers to adopt this new technology.
Still the chips are a bit to expensive to be used on all products,
but with a larger market it may change soon.
How do you sell a new cellular phone in Japan? By pointing
out all technological details? Or maybe by showing statistics
over robustness and reliability? No. The answer is: By using
light dressed showgirls, to show the products at electronic
Photo by Anders Frick
It is impossible to sell a new cell phone without a showgirl or two, or four.
Chalmers Asia Bulletin went to the Japanese electronic fair
Ceatec in Tokyo to take a look at the hottest trends among the
electronics exhibitors. Computers, PDA’s and cell phones seems
to merge into small colorful devices, and the way of presenting
new broadband routers, GPS devices or video cameras was
an interesting cultural phenomena which gave insight into the
Japanese way of thinking.
Even the smart cards becomes wireless, using the RFID (Radio
Frequency Identification) technology. Instead of contacts or
magnetic stripes on the card, information is transmitted using
microwaves or induction - sometimes at a distance of several
– Imagine that you don’t have to stand in line to pay at the
supermarket. Instead you could just walk through a reader with
your trolley and then pay, says Kazuoki Moriwaki at Lintec
Japan has been a true pioneer in many areas, such as mobile
Internet. The standard of i-Mode was the world first working
mobile internet service and is also one of few to be profitable
for the provider NTT DoCoMo. Earlier Japanese companies
showed little respect to international standards, such as having
no GSM coverage even in the biggest cities. However, the
time is slowly changing even Japanese companies, and many
of the products shown on the market could be operated booth
in Japan and abroad. The 3G phones from NTT is just one of
many examples where the Japanese companies start to follow
With more than 700 exhibitors and with 200 000 visitors, Ceatec
2004 is one of the biggest electronic fairs in Asia. Some year ago
the fair did concentrate on electronic production equipment,
but nowadays its focus has shifted into consumer electronics. It
has also turned the focus away from hard-core technology into
areas such as design and outfit. With short skirts, plastic-bra and
specially designed company necklaces it seems to be possible to
sell almost any cell phone – at least in Japan.
Photo by Anders Frick
The general trend among all exhibitors is wireless ness. Or rather
ubiquitous ness, because only being wireless isn’t enough. The
hard spelled term comes from the Latin word ubiquitous and has
the meaning of “existing everywhere and every time”. Except
from existing standards as WLAN, the electronics giants also
showed prototypes for Ultra Wideband (UWB) and Wireless
USB. These technologies are very interesting but the prototypes
indicate there will take some time before we can cut all the
cables that surround our computers and home entertainment
As can be seen, the interest for new electronic products in Japan is very big...
EXPO COMM WIRELESS took place in Seoul in May 2004 and
it is one of the biggest conferences in Asia concerning wireless
technology. One of its main focuses was “Portable internet
services and business”. Invited experts from all over the world
held seminars on recent trends of telecommunication and
wireless industries. Much attention was given to WiBro, short
for Wireless Broadband. This concept, developed in South
Korea, is believed to bridge current cellular 3G system to the
Photo by Marcus Olsson
Many Koreans showed interest to the Expo Comm Wireless in Seoul, May 2004
South Korea is of special interest when looking at introductions
of new communication technologies. They have the world
biggest penetration of fixed broadband, 3G mobile phone and
WLAN users. They have not only a high percentage of users;
they have also been much involved in the development of these
technologies. The first commercially available third generation
mobile phone system in the world was launched in South Korea
by SK Telecom in October 2000, being the first country in the
world to adopt the new generation. Compared to 2G/2.5G, 3G
technology offers bandwidth demanding applications such as
full motion video, video conferencing and internet access. The
number of 3G subscribers (based on handsets) in South Korea
are today around 22.4 millions and occupies 67.6 % of the
whole subscriber market of mobile telecom (2003.8). One of the
explanations to the success of the 3G system in South Korea is
due to their innovative terminal providers: LG, Samsung and
to some smaller degree Pantech. The development they have
contributed to have been an important factor for the stimulation
of the market. Successive innovations include:
Quality of color screens
CMOS censors exceeding 1M pixel
The launch of mini hard disks
The availability to combine cellular/Wi-Fi interfaces
The migration from 2G/2.5G subscribers to 3G has been
dramatic in South Korea. While transfer to 3G has been relative
smooth in Japan and South Korea, it is just about to establish
in the European market which have suffered from huge delays.
There has also been some skepticism over the economic viability
of the 3G technology. Several operators introducing 3G have
ended up in huge depts. Furthermore there are some drawbacks
using 3G as limit of service coverage, short battery life span and
the high cost of services. These problems and the demand for
higher data rates have created some new innovative ideas for
Recent trends of wireless communication include the use of
Wi-Fi which is WLAN technology based on the set of standards
known as IEEE 802.11. It uses frequencies in the 2.4 GHz range
and its data rate could be as high as 54 Mbps. These are not so
controlled by governmental regulations and licenses to use these
frequencies are usually not required in most locations. Wi-Fi
enables wireless compatible computers or PDA’s to connect to
internet when in reach of an access point, also called hotspot.
This technology has been very successful in the wireless internet
area but has yet to see a success in the cellular market. Some
of the biggest obstacles for Wi-Fi consumer technologies to cut
market shears from cellular telephone networks are lack of
roaming and authentication features, the limited access range and
narrowness of available spectrum. Rather than being competing
technologies they are also seen as a complement to each other,
taking advantage of the benefits of both systems. Some operators
offer mobile internet products that are compatible with both
radio systems. But there are some serious disadvantages as well,
such as the 100 mW regulated limit on the transmitter which
limits the coverage area and interference from other devices
such as Bluetooth and video sender devices. These interferences
could cause degradation in performance. Just as in the case
of 3G, the power consumption is a problem which causes the
battery life time to be short as well as it cause heat problems
for the device. What might be the most obvious disadvantage
of the system compared to 3G is the limited range. It is usually
around 50 meters indoors and 100 meters outdoors. Despite their
far less range compared to 3G transmitters, they have the big
advantage that advanced antennas could be deployed for $ US
1500 while a 3G base station costs from a minimum $ US 1 mill.
The installation of base stations is also far more complicated and
needs a license while the Wi-Fi antenna could be installed by
anyone. Today, Wi-Fi is seen as a good complement rather than a
rival to the 3G system. Due to these various problems a similar
technology, WiBro, which have some of the advantages of both
Wi-Fi and 3G is on its way to be established in South Korea.
a standard which it can export around the world. KTF, South
Korea’s second largest mobile phone operator, has already tested
a high-speed portable Internet service using WiBro technology.
They demonstrated real-time wireless web streaming and internet
browsing services. The major motivation for introducing WiBro
is that the wired/wireless telephone and broadband internet
markets are reaching a saturation point; portable internet
service is emerging as a next generation growth engine in the
telecommunications market. Several market analyses have been
done on the potential market.
WiBro is believed to play an important role in bridging third
and fourth generation mobile systems. This standard uses the 2.3
GHz band. WiBro technology offers portable internet service
which will give internet connection anytime anywhere even when
the user is on the move. The new portable Internet technology
WiBro offers is attractive due to its wider network coverage and
mobility. The WiBro system can be combined with the existing
mobile phone network. The user data rate is higher than 1Mbps
and the service charge is low compared to 3G. It will have urban
coverage compared to the cellular nation-wide coverage that has
much lower data rate.
Market analysts point out three important application areas
where WiBro technology will offer improved, or new, services
compared to current mobile phone technologies.
• Entertainment: real time streaming broadcasting and 3d
• Finance and commerce: video conferencing, interactive
advertisement, mobile banking and trading.
• Information: web browsing, file downloading, interactive
Compared to WiBro, Wi-Fi offers higher data rates; however, it
has limited coverage area and low mobility. One of the invited
speakers at the conference, Professor Hong from Seo-Kang
University gave an example of one of the big disadvantage of
the current Wi-Fi system, “If costumers want to use WLANs,
they need to seek and move to one of the many access points
offering WLAN service. This shows the low coverage status of
this system. This constitutes to about 28 million terminals, or 30
Despite of this fact Taipei has recently decided to build a
WiFi-network that will reach almost 90 percent of the capital’s
population of 3 million. Taiwan’s Q-Ware, which won Taipei’s
tender to build the network, plans to spend $70 million on
infrastructure, setting up 15,000 to 20,000 access points around
the city. New York, San Francisco, Amsterdam and Jerusalem are
among cities offering or planning city-wide networks.
The South Korean government hopes that WiBro will be
successive not only in the domestic market; they want to create
The wired/wireless telephone and broadband internet markets are reaching a
Source KISDI (Korea Information Strategy development Institute, 2002.12)
In line with this, The Ministry of Information and Communication
have decided it will pick three portable Internet operators
in February next year. The commercial service will begin in
2006. Major companies such as SK Telecom, KT and Hanaro
Telecom are among the competing companies for the three
licenses that will be issued by MIC (Ministry of Information &
The government supports this introduction of WiBro in order to
try to inspire new growth by pushing for a new communication
service. The introduction of WiBro has also had negative effects.
Criticism from market analyst expert claim that this push
strategy, where the suppliers hope to create a demand, could
be an economic disaster for companies involved in introducing
this technology to market. Furthermore, the project has created
trade problems with US that have criticized the South Korean
government because of their decision to block foreign companies
to enter the WiBro project. This could have some serious
drawbacks on the governments plan to export the technology.
Business and Investment
China’s market continues to grow in importance. Recently
its car industry passed France to become the third largest
in the world. The telecom market is the largest with more
than 320 million subscribers. The question is not anymore if a
foreign multinational firm should establish itself in China, the
question is if it can afford not to do it?
The vast lands of China offers a huge domestic market for both local and
international companies and the competition is tough.
Short economic history
China is a fascinating country. It has a long history, a rich culture,
and what now draws most attentions, an economic growth that
has placed the nation as one of the most important economies
in the world. Countless are the foreign companies who have
considered to join the wave and establish a presence in China.
During the 1980s and 1990s foreign companies swarmed into
China with the dream of finding a domestic market of 1.3 billion
consumers. A dream that never became fulfilled together with
strict regulations, to mention some difficulties, made it tough
and high losses were common. Many withdrew from the market
while other switched strategy to instead use low-wage workers
to produce products for markets elsewhere, and areas such as
Guangzhou, Shanghai and Beijing became big manufacturing
centres. Still this is a common way to do business in China,
but the market has transformed and with a middle class of
around 250 million people foreign companies can now point to
a serviceable “middle class” of tens of millions of people. The
telecom market has grown to the world largest with more than
320 million subscribers in October this year, and the car industry
has passed France to become the third largest in the world.
China’s influence on the world economy continues to grow.
A mapping of today’s China
China’s market is growing rapidly, but it is has done that earlier
in history as well. The question is what is different for companies
wishing to enter China this time? An answer to this is the
paradigm shift now taking place in the way foreign companies are
approaching China, this because the country in itself has changed.
China has come to look more and more like a real market with
all the associated challenges and opportunities that this involves.
People are getting richer which brings a larger domestic market.
The number of local companies has grown rapidly and there is
now fierce competition between foreign and local companies in
several sectors. The local competitors have emerged quickly and
often fight dirty. They emphasis investment and market share
rather than productivity and profit, and use below-cost pricing
to achieve their aims and take market share from established
foreign companies. Since China is becoming to look more like
a normal market there are also more strategic options for firms
wishing to compete. Sophisticated brand-building and marketing
strategies can be used, and improved infrastructure makes it
possible for foreign firms to move production to cheaper inland
areas of China and start to follow the cost structure of their local
counterparts. Lately, a local market developed for mergers and
acquisitions (M&A) has immerged, allowing large foreign firms
to buy up local competitors.
Options of entrance
The business climate in China has experienced major changes but
it is still challenging. Several options exist for companies wishing
to enter China and they all include obstacles of different nature
such as regulations, lack of skilled personnel and intellectual
property theft. Regulations remain but are now being relaxed in
more and more sectors after China’s WTO entrance.
Setting up a business in China usually involves high start-up
costs. Well paid expatriate staff often lives in expensive hotels
and training a local work-force can be tough. A long-term
perspective becomes necessary when it’s first after a couple of
years, when the staff is trained and the number of expatriates
reduced to a minimum, a profit might be made. Many companies
see manufacturing in China as a relentless battle with costs and
daily fights concerning everything from maintaining consistent
supplies to fending off new competitors. Despite this, operational
issues are not the all-consuming problems they once were. So
making business in China is getting better but it is still not easy.
Following options offer a way to establish a presence in China:
and establish a presence than would be building a new network.
• Representative Office; the traditional first step to enter
China, and still a very popular, is through a representative
office. This is typically used by smaller companies to establish
a presence in the market. It is technically not an investment
vehicle and it works like a branch office without the possibility to
sign contracts or take payment, but it is usually the quickest and
least expensive way to establish a presence in China. Through
a representative office the company will be enable to learn
about the market through market research, build reputation
and brand awareness, and to establish important and necessary
relationships with actual or potential customers and possible
partners for a future investment.
In order to meet investor’s demands and commitments to WTO
new options for foreign investors have appeared.
• Wholly Foreign-Owned Enterprise; the most common
way to enter China, and the dominant form of foreign invested
enterprises, is the wholly foreign-owned enterprise (WFOE). A
WFOE is a larger investment that offers simplicity and control,
and therefore also includes a greater financial risk compared to
a joint venture (JV), but the risk of leaking intellectual property
is reduced. It is possible in most sectors to establish a WFOE,
but one of the exceptions is the car industry where a 50% joint
venture is required. Other regulated sectors are energy, defence,
media and banking.
• Joint Venture; the earlier dominance of JVs was primarily
due to the fact that WFOEs were not allowed in many sectors
of the Chinese economy. In the 1990s JVs accounted for 75
percent of all foreign investment. These arrangements allowed
foreign multi-national companies (MNCs) to access China’s
market but it often denied foreign companies management
control over their domestic investments. Being the only way
to enter a sector before has led to many companies buying out
their partners as it becomes legal. JV’s is no longer a necessity to
enter China but it is still attractive due to its unique commercial
advantages. Forming a JV with a Chinese partner often enables
a foreign investor to tap valuable resources and mitigate risk
to exposure. JV partners can help lower start-up costs and
brings local knowledge to the partnership. Many has, when it
became legal, bought their partners but others have continued
successful relationships and expanded their businesses together
with their JV partners even though the law does not require
them to do so anymore. Risks do exist, especially when it comes
to intellectual property. During the 1990s many companies
experienced troubles with partners leaving the cooperation and
stealing intellectual property to later start manufacturing the
same product at their own company. JV is still the only way to
enter certain sectors. For foreign investors interested in selling
to the Chinese domestic market JVs still represents an attractive
option since distribution related services remain regulated. This
will be open for WFOEs in the end of 2004 but establishing a JV
with a Chinese partner gives access to existing channels and may
offer a quicker, more economical way to learn about the market
• Holding Company; one of these new options is the holding
company that offers advantages for foreign investors looking to
coordinate and consolidate functions across multiple business
units in China. Business functions such as procurement,
importation, sales and marketing can all be integrated to achieve
economies of scale. The holding company structure is at present
only open to a limited number of major foreign investors. The
minimum capital requirement of $30 million together with the
requirement of at least 10 foreign invested enterprises in the
country effectively shuts the door for most companies, but the
number of holding companies is increasing as more and more
investors meet the requirements.
• Research Centres; another option that has increased in
popularity is foreign-invested research and development centres.
In February 2003 China had more than 120 centres. These
centres have grown in importance for many companies and has
now transformed from black holes in the balance sheet to valuegenerating operations. Most of these centres focus on product
development for the domestic or regional markets, but basic
research appears to be on the rise and several companies has
been able to manage large cost saving by conducting research in
Shanghai, a growing city in a country with one of the most important economies in
How to succeed?
Hong Kong based HSBC points out four keys to success in China.
The first key is local knowledge about the market. This can be
achieved by for example a representative office that gather
knowledge through activities such as market research, or a jointventure with a local company who brings the local knowledge.
The second key is to be realistic. This means realise that a WTO
membership doesn’t change everything immediately. It is also
important to realise that there are major concerns in the banking
sector and for China this is considered to be the heart of their
economic problems and a long-term challenge for the nation.
The third key is being prepared, both in a short-term perspective
as well as a long-term. Things happen quickly so a company
needs to be prepared to move and react quickly. The last key is
patience, to use a long-term strategy to meet short-term goals as
well as a long-term focus with a short-term agenda. A long-term
attitude is necessary because income flow will not come early.
The Swedish Trade Council is an organisation that offers different
solutions for companies wishing to enter China or other markets.
Their offer with the lowest risk is the Swedish Trade Council’s
Business Support Office. Everything from staff to office is
arranged by the Swedish Trade Council for a monthly fee. This
is an option suitable for small and medium sized companies as a
first step into the Chinese market.
Doing business in China involves many challenges. Apart from
facing the legal and bank system, bureaucracy and regulations,
a company has to face a different culture and Guanxi; a kind
of sophisticated networking where personal relations are
necessary for business. Contacts are important in Guanxi and
trust is created by personal contacts which sometimes can
make it difficult or impossible to do business without knowing
or having a relation to the right person. This is a way of doing
business many foreigners are unfamiliar with and never really
Guanxi is a very important element in doing business in China. It means relations
and refers to complicated personal networks. Good Guanxi gives a major
advantage when trying to establish a company in China.
China is an existing and challenging market. It’s growing fast
and is becoming increasingly important. Local companies have
emerged and are starting to be successful both within and outside
China. Restrictions and regulations remain but the risks and
problems shouldn’t be over-played. Patience, understanding and
a well-planned strategy offer a good opportunity for a successful
business in China.
• China Business and Investment Roundtable, The Economist
,Tokyo, June 24 2004
• Finance and Economics: Investing in China, The Economist,
• Doing Business in China, The Economist, 2004
• Investing in China is about to get easier, but not less risky, Wall
Street Journal, 2004
• Doing Business in and within China, William Atkinson, Risk
Management Magazine, 2004
• Strategies for investing in China, The China Business Review,
R. Mark Mechem, 2004
• A Whole new world, Wall Street Journal, Neil King Jr, 2004
• Multinational Companies in China, The Economist
Intelligence Unit, 2004
• A billion three, not for me; The Economist, 2004
• Interview, Axel Nordegren, The Swedish Trade Council,
Zhong Guo literarily means middle country and it is the short for “Peoples Republic