Mobile

China Mobile's CEO and the thumb culture

Wang Jianzhou describes how the cellular company will navigate an expected explosion in business.

Editor's note: Cliff Miller, CEO of Mountain View Data, has conducted a series of interviews with Asian tech leaders that will appear on CNET News.com. Miller has traveled and worked extensively in Asia for several years.

I first met Wang Jianzhou in 1983, when I was teaching at Zhejiang University in Hangzhou, China--one of the key science and technology universities in China. He participated in an English speech contest that I had organized and ended up being one of the winners.

At the time, Wang Jianzhou was a young member of the management team at the Posts and Telecommunications Bureau of Hangzhou City. He was taking time off as a graduate student to study management and technology.

Wang Jianzhou is now the CEO of China Mobile, a mobile telecommunications service provider that is the country's fourth-largest company in revenue. With 250 million customers--it adds about 4 million each month--it has the largest mobile phone subscriber base in the world.

His task is to steer China Mobile along the high-growth trajectory it will inevitably take for the next several years. At the same time, he must bring international practices into the corporate culture, and guide the company through changes as China takes on its obligations as a World Trade Organization member.

Here are some highlights from a conversation I had with Wang Jianzhou during a recent visit to Beijing.

You mentioned a couple of meetings ago that you looked at Japan as being a "thumb culture," where they would get on the train or wherever, using their thumbs to input. Has China become a thumb culture yet?
Wang: I think we are very successful in that. In the past for China Mobile, we had only 6 percent of our revenue from value-added services, like short messaging. And today, the proportion for value-added services--we call them nonvoice services--is as high as 20 percent. Twenty percent is a very good proportion for telcos in the world. About half--that means 10 percent of total revenue--is from short messages, or SMS.

Do you prefer SMS over voice calls?
Wang: Yeah, for myself I like SMS for many things. If you discuss some topics, you should use voice. But if you're just saying "hello" to people, then SMS is very good. I think it's more convenient than computer, than e-mail.

Cliff Miller and Wang Jianzhou
Credit: Courtesy of Cliff Miller
Cliff Miller speaking with Wang Jianzhou.

This year, the everyday average is 800 million SMS per day for China Mobile only.

Another thing maybe you will be interested in: We can use a handset to listen to music and to other things. The revenue income from mobile music is more than the total income of the music industry (in China).

I'll give you a very simple example. In one month, we downloaded a popular song. It is very popular. The name is "The Mouse Loves Rice," "Laoshu ai da mi" (laughter). And there were 5 million downloads per month. And every download costs two yuan (25 cents). That means 10 million yuan ($1.25 million) just for one song.

I noticed that the Chinese government and industry will be promoting 3G (third-generation networks) next year. And they expect by the Olympics, by the year 2008, there should be 118 million 3G users. How do you see that changing China Mobile's business and changing society in general?
Wang: At China Mobile, we are waiting for the building out of our 3G networks after we get the 3G license. And we think there will be a lot of applications based on 3G. And China Mobile is the mobile communication partner for the Olympic Games--we promised to provide 3G services during the Olympic Games.

Do you think that 118 million users is possible in two years?
Wang: I don't know. China Mobile didn't give any target for the subscriber base, because for China Mobile, it will be a very smooth migration.

First, we have a 2G network with very good coverage. For 3G, because it provides data communications, not every person would like to use that. In order to control the (capital expenditure), we will just build out the 3G network in some places where there is the demand for high-speed wireless data.

So for phase 1, we plan just to have coverage in coastal areas, in large cities where there is a big demand for that. And we think for our customers it will be very easy: They keep the same number, even the same SIM card, and just change (the) handset when (they migrate) to 2G and 3G.

Can you tell me about when you were growing up? Something about your parents, what kind of values they instilled in you when you were a child that have stayed with you throughout your life?
Wang: I grew up in Hangzhou, Zhejiang Province. And of course, I learned a lot from my parents.

When I was very young, my mother asked me a question: "Why are so many people so busy? Everybody is busy. What will be the purpose for all of them?" I said, "Their work is for manufacturing." And she said, "Manufacturing what?" I said, "Manufacturing steel." "And what is the purpose of steel?" I said, "For building big buildings, cars and trucks." And she said, "What is the purpose of buildings and cars?"

Later she told me, "Everybody has a purpose, the purpose of studying, the purpose of working. The only purpose is to make people's life better." I was very impressed by that.

So does that carry through to your work here at China Mobile?
Wang: That's true. We are very busy. Why are we so busy? To serve our customers, to serve our shareholders and our employees. (It's) very useful to me, this philosophy.

We hear about doing business in China and the "houmen," or "backdoor," connections. Is that a problem you have to deal with in China Mobile?
Wang: Some people (talk about what you've mentioned). For China Mobile, my thought is different from that. (For example), we have a very large amount of "cap-ex" (capital expenditures) every year. For this year, the cap-ex is about U.S. $9 billion. We have our rules based on international practice. We have bidding for any procurement. And when we do other things, I think we should make it very fair and based on international practice. We try to change things like "houmen," and I think we are very successful.

Now's the time people from foreign countries can participate in Chinese telecommunications.

Another example is employee recruiting. This year, the headquarters of China Mobile wanted to recruit about 45 new employees, and we got applications from about 15,000. So we should have a process to find who will be the suitable person. I think all of the management members follow our rules.

You're listed in Hong Kong and on the New York Stock Exchange, but I've heard that you're also planning to list in China.
Wang: That's true. Based on the exchange regulation, only a domestic company could be listed in mainland China. So, we're thinking if a Hong Kong-registered company can be listed in the mainland, (we can) use the type similar to ADR (American depository receipts) (and) call it "CDR" (China depository receipts). That's our suggestion and some experts' suggestion.

We're waiting for permission from the government because this is a very new type?of methodology. We hope our customers can also become our shareholders. And today, it is not possible. As for the capital market: If we are listed in the domestic market, it will change the structure of the total capital market. So we think it is also meaningful to the market itself.

The last time we met, you said that anybody in your company is free to write you an e-mail, and you will look at all of those.
Wang: I promised: If you write to me, I promise to read your e-mail. A reply means I have received your letter. And (I will do this for) anybody, if you are an employee of China Mobile. And sometimes I will write them and discuss something about what they said in their e-mail.

(Before I made my promise), I thought maybe the letters would have some (requests)--some people would like to change their job, some people would criticize something, or (would want) something for themselves, salary, (benefits), or other things. But as a matter of fact, 90 percent of them are proposals, suggestions to the company. So I was very satisfied with that.

What are the opportunities for foreign companies in China?
Wang: I think in the agreement for entry to WTO, one of the (sections) is for telecommunication. And based on the agreement, foreign operators could enter the Chinese telecommunications market. But there was a transition period with some limitations. I think (now's) the time people from foreign countries can participate (fully) in the Chinese telecommunications (market).