Lintech Limited General Manager Yang Fan is largely responsible for their recent business strategies leveraging on CEPA's benefits.

In 1995, inspired by the privatization and liberalization which reshaped the telecommunications industries in the USA and Europe, the Government of the Hong Kong Special Administrative Region (HKSAR) commenced the deregulation of our own telecom market. Free competition became the new rule of the game, and in the decade since then development and change have been rapid. We've seen the emergence of many more players and many different marketing strategies - including dramatically reduced prices, mergers and acquisitions etc - all aiming to secure a slice of this lucrative market. But deregulation wasn't the only factor to affect Hong Kong's telecoms industry in recent years: just as local competition was becoming more intense, Mainland China was implementing market reforms and opening its doors to outside companies. Many Hong Kong telecoms enterprises grasped the opportunity to tap the potential of the vast China market. It was case of "Survive in Hong Kong, but go north for success." However, one company from Mainland China decided to do exactly the opposite: two years ago a company named Lintech Limited ("Lintech") came south to establish a foothold in the intensely competitive and relatively tiny Hong Kong market. It was a surprising and unusual move that immediately set them apart from the rest of the pack - but seeing opportunities that others don't has become a hallmark of their success.

Lintech, a wholly owned subsidiary of the Guangdong Telecom Industry Group (which is itself part of China Telecom) was established in 1994. With headquarters in Hong Kong, it is the only truly overseas company in the China Telecom Industry Group.

The general manager of Lintech - and the person largely responsible for the recent business strategies and overall development of the company - is Yang Fan. Prior to joining Lintech in 1996, she graduated from Jinan University with a masters degree in business management and spent over 10 years working in the International Bureau of Guangzhou Telecommunications Office and the Guangdong Post and Telecommunications Management Bureau. She now has over 20 years' operational management experience in the telecommunications industry in China, and is undoubtedly a key factor in Lintech's recent successes.

In a recent interview about Lintech's development, she explained the company's bold move to Hong Kong: "In 2004, we were aware that the market environment had changed dramatically. Lintech's function as the window company in Hong Kong of a state enterprise was becoming less significant, so there was an imperative need to conduct an overall review and re-assessment of our business direction. Following the implementation of the Closer Economic Partnership Arrangement between Hong Kong and the Chinese mainland (CEPA), economic and trade relationships between Hong Kong and China had become much closer. Business between China and Hong Kong was prospering, with many Hong Kong companies having relocated their factories or production lines to China and keeping just their headquarters and sales and marketing departments in Hong Kong. This booming trend was complemented by China's Individual Visit Scheme, which relaxed visa requirements for Mainland residents (especially those from Guangdong) wanting to make a visit to Hong Kong for leisure travel and business. Long-distance telephone traffic rose rapidly, and demands for cross-border value-added telecom services increased significantly.

"In 2004 Lintech carried out a full-scale review and re-assessment of its business direction with a view to re-adjusting our market position. In 2005, we proceeded with a careful re-structuring of our business operations, and at the beginning of 2006 we officially launched the cross-border value-added telecom services."

Despite the intensity of competition in both the China and Hong Kong markets, Ms. Yang Fan says Lintech were not only able to find a successful niche all of their own - which enabled them to succeed in a remarkably tough business environment - they were able to turn competition into cooperation opportunities with the partners and corporations of local industries, operating on principles which she describes as "complementary-based" and "double-wins."

"The market strategy of Lintech," she says, "enables us to tap into two very different revenue sources. For Hong Kong customers we make available the domestic telecommunications services throughout China; and for customers in China we offer easy access to Hong Kong telecoms services.

"The emphasis of our market positioning is first and foremost cross-border," she explains, "but the market targeted by Lintech is neither Hong Kong itself nor Mainland China: it is the 'space' between the two. A recent market research study indicated that this 'space between the borders' appeared to be largely unexploited, and the potential for development was enormous."

Cross-border telecom value-added services

Of course, Lintech is in the enviable position of having the strong support of China Telecom and the Guangdong Telecom Industry Group. By leveraging the use of available resources and technology, and extending existing product portfolios, the company was easily able to develop or repackage a range of cross-border telecom value-added services tailored to the needs of the market.

Ms. Yang proudly pointed out that in the two years since Lintech re-formulated its marketing strategy, the company has already made impressive progress in providing value-added cross-border telecom services.

160 Information Service In 2005 Lintech made the Shenzhen/Guangzhou 160 Information Service available to Hong Kong CSL users, and then in 2006 extended the service to New World Telecom, Hutchison Telecom and other telecoms companies. The 160 Information Service provides Hong Kong customers with comprehensive information on food, travelling, shopping, transport, entertainment, accommodation and investment. For the past 10 years consecutively, it has been voted one of the best service platforms in Shenzhen. Ms. Yang recalled one case with a customer who was in Customs clearance and, when asked to provide his Chinese telegraph code, was suddenly at a loss. He had no idea where he could get the necessary information, so as a last resort he tried the 160 Information Service. Remarkably, they were able to solve the problem and he was able to get through Customs without any further problems. Riding on the success of the 160 Information Service, Lintech is now in the process of building the 170 Information Service platform which will provide customers with Hong Kong information.

IT Outsourcing Service Lintech's IT Outsourcing Service provides a one-stop, across-the-network solution to Hong Kong businessmen with manufacturing plants in China. It uses Hong Kong as the window and entry point for a full-scale nationwide network service. The IT Outsourcing Service, acting as a "one-stop shop", covers everything from applications to installations, and includes maintenance. It also provides a full package of voice and video-frequency value-added products and services.

The comprehensive offering of the IT Outsourcing Service is extremely useful to Hong Kong companies doing business in China. For example, the Hong Kong Trade Development Council (TDC) set up 11 external offices in various cities in China, but each of these offices had to deal with different telecom service providers. The result was a lack of coordination, and this was affecting the services provided by the TDC itself.

Lintech proposed to TDC an integrated package solution, with Lintech themselves acting as the single representative for TDC to deal directly with the multi-parties in China. In the process, Lintech fixed all issues relating to network access, message delivery, payment settlement, etc completely to the satisfaction of TDC.

Looking forward

Ms. Yang believes that the achievements of Lintech to date have a lot to do with the company's ability to grasp opportunities arising from the change in the domestic and overseas telecom markets.

"The deregulation of the Hong Kong telecommunications market reduced the market entry cost," Ms. Yang said. "Compared to other industry players, Lintech was relatively behind in entering the market - but another advantage of that is that we didn't have any old baggage and were able to utilize the latest technologies to offer more competitive services.

"The next three years will be very critical for us as far as our development is concerned, but we now have a dedicated team determined to build Lintech into a well-known, well-established telecoms operator with core competitiveness in Hong Kong."

Ms. Yang added confidently: "Even by 2008, when the domestic telecoms industry in China is liberalized, foreign ownership and investment will still be limited to 50%. Lintech therefore has sufficient time to develop cross-border telecom value-added services. Looking ahead, the economies of Hong Kong and Mainland China will merge even faster, and the demand for cross-border telecoms services will grow in greater volumes. Lintech, as a provider of cross-border value-added telecoms services, will assume an even more important role in future."

Turning to the future prospects of Lintech, Ms Yang summed up the situation as follows:

"Lintech will adhere to the principles of 'Good faith, professionalism, innovation, and win-win deals' in our endeavor to build new frontiers of cross-border telecom value-added services, succeeding growth for both the corporation and its staff."