Procuring Telecommunications and ICT Solutions in China. Neil Gallagher Director of Sales - Europe 31 st October 2018
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1 Procuring Telecommunications and ICT Solutions in China Neil Gallagher Director of Sales - Europe 31 st October
2 Agenda A short history of Telecommunications in China The role of Ministry of Industry and Information Technology (MIIT) China s Cyber Security Law Using Encryption in China Your Procurements Options For sourcing services in China 2
3 A Short History of Telecommunications in China Before 1994, the Ministry of Posts and Telecommunications (MTP) provided telecom services through its operational arm, China Telecom. In 1994 China Netcom was established in competition to the former monopoly; China Telecom In 2002 split China Telecom geographically into north and south: China Telecom - North kept 30% of the network resources and formed China Netcom (CNC) and 70% of the resources were retained by China Telecom - South or simply the new China Telecom. In October 2008, China Netcom merged with China Unicom to become China Unicom. 3
4 A Short History of Telecommunications in China - Regulatory environment - MIIT Established in March 2008 State agency of the People s Republic of China responsible for regulation and development of the postal service, Internet, wireless, broadcasting, communications, production of electronic and information goods, software industry The MIIT grants licenses, supervises competition, promotes research and development and service quality as well as for developing tariff rates. The MIIT has built up a nationwide regulatory system composed of Provincial Telecommunications Administrations (PTA) with regulatory functions within their respective provinces. Since 2014, the Cyberspace Administration of China is responsible for setting policy and the regulatory framework for user content generated in online social activities on Internet portals. 4
5 Global leader in broadband networks Fiber broadband construction: The world's largest fiber access network. By the end of 2017, the penetration rate of fiber users reached 82.7%. 4G quickly penetrated: 4G network has covered all cities and major townships, 4G users reached 997 million, and the penetration rate is over 70%. Fiber broadband user penetration rate comparison 4G user penetration rate comparison Source: MIIT Source: MIIT,OECD 5 5
6 Faster and more affordable Internet connection Fixed broadband: The average access bandwidth exceeds 50Mbps, and the expenditure per Mbps is less than 1 yuan, only one tenth of Mobile data: The price per MB data is close to 2 cents, and the monthly average mobile data exceeds 2GB. 6 6
7 China s 5G Rollout Projected Number of 5G Subscribers in China 428 M - China outstripping the US in the deployment of 5G - U.S. carriers have built under 30,000 new cell sites since China has built 350,000 - China has spent $24 billion more on 5G than the US Source: Deloitte August 18 7
8 China s Cyber Security Law Why? Ensure all Chinese Citizens online profiles remain private All companies that collect and process personal data in China must comply by December 31 st Forcible since June 1 st 2017 Grace period granted until December 31 st
9 China s Cyber Security Law What do I need to do? Host personal data in Chinese Territories Obtain user s consent concerning the collection of their personal data. We can assume the law retrospectively applies for all your existing Chinese citizen s personal data 9
10 China s Cyber Security Law What is Personal Data? Any personally identifiable information Full Name, ID Number, Birth Date, Address, Online identifiers such as IP Address, Cookies, phone number etc. 10
11 China s Cyber Security Law What are the rules? Data Transfer from China to overseas locations must comply with the Cyber Security Law. Personal Data should be stored in China User s personal data collected must have their consent 11
12 China s Cyber Security Law Data Transfer Abroad Transfer of personal data abroad must be for legitimate reasons is necessary and needed for business purposes. Many Multi-national s as a consequence are moving their data infrastructure from Hong Kong/Singapore to China. Apple and AirBnB are two examples and are hosting services in China for Chinese consumers Many European companies still retain personal information on Chinese citizens outside of China Hosted at HQ and/or Cloud platforms 12
13 China s Cyber Security Law What if I don t comply? Companies that do not comply may face warnings and orders to comply Confiscation of gains and fines Suspension of websites Business or Trade license in China removed Some companies have already been warned and sanctioned. 13
14 China s Cyber Security Law Recommendations? Advice is to conduct a thorough security assessment and seek approval for any cross border transfer of personal data. As part of assessment, review all data collection systems and make sure user is aware of scope and usage of data collected. Ensure you have user consent to collect data. Collected data should be recorded and time stamped, with evidence of user s permission. Update your privacy policies to cover to reflect assessment activity. Don t forget IOT devices that could be collecting or transferring personal information Recommendation assessment every year. Host all data collection systems in China 14
15 Using Encryption in China If your company is employing your own encryption over the Internet you could face issues. Encryption technology is regulated by the Office of State Commercial Cryptography Administration (OSCCA), and only OSCCA-approved products are sanctioned for use in China. No foreign encryption technology is allowed to be sold in China. Solution is to use regulated operator s own IPSEC solution - China Telecom s encryption Technology is approved 15
16 Procurements Options For sourcing services in China Source locally in China Source via your global provider Source via a Chinese Operator with a European Presence 16
17 Features Procurements Options For sourcing services in China Local Procurement - China Central Procurement - Via China Telecom Europe European Account Management European Customer Service English Speaking Help Desk Contract Under European Law Negotiable MSA Negotiable SLA Competitive Commercial Terms Mandarin and English Speaking Operational Support Mandarin and English Speaking Project Management Local Billing - China In territory Support in both European and Chinese time zones In depth knowledge of regulatory environment Central Procurement - Via Global Provider 17
18 Summary The Telecommunications and ICT environment in China is unique Understanding the environment is essential Be wary of China s Cyber Security Law Take Legal advice if unsure Using a specialist supplier has many advantages 18
19 Neil Gallagher Director of Sales - Europe 31 st October 2018 neilgallagher@chinatelercomg lobal.com
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