China Mobile refutes monopoly claim

Panel participants discuss China's transition toward a consumption-driven economy at the Summer Davos Forum 2013 in Dalian, Northeast China's Liaoning Province, on Thursday. Photo: Xinhua

A top executive of China Mobile refuted a claim by a renowned Chinese economist Thursday that the company operates as a monopoly in the telecommunications sector, and said that the accusation could instead be leveled at Tencent Holdings' WeChat instant messaging service.

Zhang Weiying, a professor of economics at Peking University, said that China Mobile has to drop its position as a monopoly if it wants to form alliances with other companies and offer innovative Internet-based products.

Zhang was speaking as part of a panel discussing China's consumption environment during the Summer Davos Forum, which is being held in Dalian, Northeast China's Liaoning Province.

Li Zhengmao, another panelist and the vice president of China Mobile Communications Corporation, said in response that the company could not be considered a monopoly because it faces competition from other telecom companies.

"The fact that we have two-thirds of the cellphone subscribers in the market does not lead to the conclusion that we are a monopoly," Li said. "My colleagues and employees do not understand why we are considered a monopoly," he said.

China's telecom market is dominated by three State-run firms: China Mobile, China Unicom and China Telecom. China Mobile had 745 million users as of the end of July, a figure that is reportedly more than double the amount for the other two companies.

Li argued that WeChat - a smartphone application developed by Tencent that allows its users to exchange text and voice messages using the Internet - is a monopoly.

"Tencent Holdings' WeChat service should be called a monopoly, because no other products can compete with it," Li said.

WeChat had gained 500 million users in China and 100 million more overseas as of August since it was introduced in 2011. Its competitors include China Mobile's Feixin and Line, developed by Korea Line Corporation, both of which have far smaller shares of the market.

Tencent had not responded to Li's claim by press time.

Zhang, however, argued that Li made the statement because "some economists have defined 'monopoly' inaccurately," noting that monopolies are created when the government bans businesses from entering a particular market by establishing certain policies or laws.

"If the government allows everybody to freely enter the telecom market … the players will be able to compete fairly and every player could be kicked out of the game at any time," he said. "In this sense, WeChat is not a monopoly, but China Mobile is."

Zhang also said that the rivalry between China's three State-run telecom companies is a "tangled warfare," and not an example of fair competition.