Evaluating the Catching-up Process of China’s Mobile Communication Industry

Abstract: The mobile communication technology has evolved from the first generation (1G), when the first radiotelephone service was introduced in the US in late 1940s, to the third generation (3G). In each generation, different standards and technologies were promoted by technologically and economically advanced countries. For example, the major 1G communication standards were: AMPS promoted by the US, NMT promoted by Nordic countries, and TACS promoted by the UK. The second generation (2G) communication standards include GSM promoted by the European countries and CDMA (IS-95) promoted by the US. Behind these different standards, there are entire industry chains and huge profits. To catch up with these forerunners, lagging countries usually need to go through different stages including duplicative imitation, creative imitation, and then real innovation. In the 1G era, China did not have its own standard, but it adopted the British TACS systems. In the 2G era, China did not have its own standard, and it adopted both the European GSM systems and the US CDMA systems. However, when the 3G era was approaching, China decided to seize the opportunity and developed its own 3G standard: TD-SCDMA. In January 2009, China issued three different 3G licenses to three different operators who utilized TD-SCDMA, WCDMA, and CDMA2000, respectively. The Chinese proposed 3G standard began to be commercialized with this first licensee. China has been trying to catch up with the leading countries in the mobile communication industry. This thesis examines the question of whether this catching-up process was successful or not. The purpose of this thesis is to give readers insights into the Chinese 3G market, and to help them to understand the catching-up process being undertaken by China’s mobile communication industry. The thesis first introduces some background information about 3G, TD-SCDMA, and the Chinese telecom market. Then, it reviews theories of technological catching-up and leapfrogging. After that, it presents a case study of the TD-SCDMA Industry Alliance that examines six determinants measuring the catching-up process: Sources for Competitive Advantages, Strategies and Policies, R&D Efforts, R&D Outcome, and Market Success. The final part of the thesis gives answers to the research question and reveals the profound impact brought by the catching-up process of China’s mobile industry.