BT to China: let me in! BT has turned up the heat on the Chinese government, demanding that international telcos be allowed to sell their wares directly into the country. The telecoms giant’s APAC president, Kevin Taylor, told attendees at its Asia Pacific Influencer Summit in Hong Kong on Thursday that it has a good “two way partnership” with …
The analysts are right to note that many other telcos have been, tried, and come home again, but that applies beyond telecomms. Many companies in different sectors have taken the slow boat to China, but found that they can't add sufficient skill or value to overcome the regulatory, political, and cultural issues, and they've been forced to retreat. This includes some of the world's biggest and meanest retailers, the largest and most agressive banks. Admittedly some Western product companies have managed to do well on the basis of "show off brand" value to the emerging rich/middle classes, but even the internet and energy giants have found that it is a struggle that they don't usually win.
So I think the interesting thing here is to ask what the **** was going through BT's director's tiny brains when they thought that (a) unlike every other infrastructure/channel/intermediary/retail business why will lardy-bottomed monopolist BT be able to bring home piles of Chinese gold, and (b) why do they think that whining that it isn't fair will change things? Smells like they've had some expensive management consultants in, who bedazzled them with 160 page decks of Powerpoint, blowing off about China's growth rates and market size. But I'm sure that the BT board are worth every penny of the £6.6m they collectively pocketed last year.
Going back a few years, they saw everybody piling into BPO and infrastructure support, so they had to do that too as BT Global Services, and that all ended in tears with a £1.6 billion write down, as more than a few Reg readers will know. China has rightly told them to go forth and multiply, so their next idea for losing shareholders money is to get involved buying football rights, there's another sensible decision, based on the considerable media rights expertise BT has! They are paying around £500m for rights to 38 matches, so to break even (allowing for financing and bid costs) they've got to make an incremental profit of £15m from each of those games, half of which aren't even exclusive to BT. According to BT's own wishful thinking, this "investment" will win back customers, "drive fibre", increase loyalty, and open up the market.
Smooth.
"...unlike every other..."
Someone is going to be first - it might be BT, it might not, but hit a wall often enough and eventually it will fall.
"...lardy-bottomed monopolist BT..."
Ignoring the fact that even in the UK they aren't a monopoly, on the Global scale they are "just another player" in the world market.
"...they saw everybody piling into BPO and infrastructure support, so they had to do that too as BT Global Services, and that all ended in tears..."
Largely due to the bottom falling out of the world economy, a lot of other players got burned too.
Until such time as Western politicians find the fortitude to mirror China's regulatory scheme Western businesses will not get a foothold in China.
Western economies (especially the US) are eventually going to collapse because we've sold our base manufacturing capability down the river and we've flat out become soft. We regulate our own businesses to the point they can't compete domestically with China, while China outright bars outside investment. They are smart enough to realize they can keep their money in house as well as get our money by allowing cheap manufacturing to continue and we won't do anything substantial about it.
Now finally a middle class is evolving in China and putting pressure (subtle but there at least) on the ruling class to allow more freedoms. There is even a budding environmental movement which will eventually put the same economic pressures on their manufacturing as we have. Once the trifecta of environmental regulation, health and safety regulation and increasing demand for similar amenities as other nations have take root there it will sway the balance back towards our domestic suppliers. The question is whether it will be too late to save our economies. Or will the West become the suppliers of cheap manufacturing and desktop support for the new wealthy elite countries of China, India, etc?
There would be some karma in that, but I don't want to see it come about. Call me what you will. I would prefer that we ALL have safe, clean and economically viable jobs whatever they might be and that the cultures of various nations be respected by all. Since I don't partake of reality altering substances I probably won't be seeing that, but it is a nice pipe dream.
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