Product of necessity

Author: | Published: 1 Sep 2007

In 1994 Chinese telecom operator China Unicom had a national mobile telephone operating licence but no capital. Looking to source both capital and operating expertise to be able to compete effectively against the incumbent monopoly operator, the Directorate General of Telecommunications (later reincarnated as China Mobile), China Unicom turned to the panting horde of international telecom operators and foreign financial investors lined up at the border salivating at the prospect of tapping into the vast Chinese market for mobile telephony.

There was one problem: foreign investment and participation in telecoms in China was prohibited. Not simply restricted but strictly and unequivocally prohibited.

It was in this context that the China-China-Foreign (or CCF) structure was born. It was the product of necessity, ingenuity and a particularly Chinese kind of pragmatism that happily ignores black-letter law whenever compliance is not convenient. Although the CCF structure in the China Unicom context had several...