Investors As China Telecom example essay topic

Dear Sir, I am a Chinese student currently studying in Singapore. I am writing this letter on behalf of all the China Telecom users who are abroad but concerned of our Chinese companies. I just learned that China Telecom raised connection charges for long-distance calls to China to at least 17 US cents per minute, which is about an eightfold rise. According to your announcement, this adjustment was done to! ^0 raise the charges to the standard it should be! +/-, to! ^0 crack down on illegal forms of termination of international minutes! +/-, to make more profit and to improve your future stream in order to impress investors as China Telecom prepares to launch an initial public offering on stock markets in New York and Hong Kong.

However, I think this adjustment not bring desired effect, oppositely, it may bring long-term negative impact to your company. It may not hit illegal operators at all, but it hurts all the Chinese who are abroad and supporting China Telecom. They may lose confidence to you. First of all, the connecting charges after adjustment is not!

^0 returning to the standard it should be! +/-, but much higher above that. From economics prospective, termination charges depend on three main factors: cost of hardware facilities, cost of labor and the profit. Nowadays, prices of facilities are standardized by globalization. And China has plenty of labor resource, thus labor in China is comparatively cheap. Therefore the termination charges should be lower but not higher than its original value. Secondly, to raise connecting charges in order to shut down illegal operators is actually illogical and may not work.

We need to, of course, crack down on illegal operators to regulate the market, but this does not have direct relation with connection charges. Illegal operators will not automatically disappear after the charges are raised. Thirdly, to raise charges in order to make profit is not a pleasant decision. This adjustment will make Hong Kong people spend about 1.5 billion more on their annual telephone bills. To avoid that, they may look for some other ways of communication, for instance, using the Internet or choose other companies.

There is already a group of Hong Kong businessmen stopped using China Telecom to protest. Microsoft company has also increased advertisements about Internet calling. If this situation carried on, China Telecom would soon lose a lot of customers. Last but not least, raising charges will discourage investors outside China.

As a Hong Kong broker has said, ! ^0! -This is not a wise decision. It will make great negative impact on our business with mainland. And it will make us lose confidence to China Telecom and thus quit it.! +/- Through raising charges, China Telecom may increase short-term income, but surely will make investors feel that China Telecom is unreliable.

For a company, especially a company going to be listed in foreign market, image is very important. We cannot afford letting foreigners think that Chinese are incredible. Therefore, I would like to suggest China Telecom to withdraw its decision and lower the international connection charges. Most of the China Telecom customers are Chinese students and businessmen. To! ^0 Serve People! +/- as you listed in your mission of company, this might be the best way.

At the same time, I think if there would be similar cases in the future, you may try to follow international procedure and regulations, which suggest you to inform and discuss with public first, in order to gain more support and reduce unnecessary misunderstandings. This will also help you build a reliable, honest and transparent image among investors. To make more profit, raising charges is not the only way. I feel that if China Telecom is facing financial problem, it may be because of inefficient management and usage of resources. As China become a member of WTO, foreign telecommunication organizations are coming in and competing with our local companies. To remain competitive, China Telecom has to find its position and modernize its management system.

You may learn from others! experiences and adopt some advanced methods of management. I hope China Telecom will adapt well in the gradually open market, and become strong through practice. As a Chinese, I hope to see China Telecom in the top international companies in near future. And I would like to serve in your company after I graduate. I would like to use my knowledge and experience to make contribution to our Chinese companies. Yours sincerely, Fiona.