【正文】 res and processes that are needed A view on the implications for the existing workforce, in terms of productivity, changing job definition, and retrenchment A view of the new strategic role of HR, and the required HR capabilities 11 FIVE SPECIFIC MARKET FORCES WILL CHALLENGE THE HR STRATEGY GOING FORWARD Performance management Requirement definition Sourcing placement Employee development Leadership culture WTO Competition Technology Business Migration Customer Service External factors affecting the anization BCG human resource strategy framework BCG HR strategy framework links external market factors to internal anizational requirements 2 1 5 4 3 12 DETAIL OF MARKET FACTORS IMPACTING HR STRATEGY WTO will further open the mobile phone market ? Defined timetable established ? New foreign investment ? Open wireline services in 6 years Regional market positions will e under pressure Rapid introduction of 3G technology standards Traditional borders between businesses will change Customer value proposition will migrate ? Uni already growing fast ? 3rd operator likely to be allowed into market by govt. ? Transition from 2G to or directly to 3G ? Rapid growth in wireless data services ? Wireless data allows greater share of wallet ? Telco and media value chains are migrating ? Changing success factors over time ? Basis of petition shifts to customer service International HR practices will have greater impact as foreign investment increases Increased pressure on employee retention from entry of new players Increased petition for technically qualified staff New capability requirements around service and product development Introduction of customer service as a core skill for workforce WTO Competition Technology Business Migration Customer Service 1 2 3 4 5 13 External factors in detail 14 CHINA’S WTO AGREEMENT INCLUDES SPECIFIC PROVISIONS FOR FOREIGN INVESTMENT INTO THE CELLULAR MARKET Upon WTO accession Within 1 year of accession (originally within 3 years under US deal. Accelerated by EU agreement) Within 3 years of accession (originally within 5 years under US deal accelerated by EU agreement) Beijing? Shanghai ? Guangzhou ? Chengdu, Nanjing ? , Xiamen ?, Chongqing, Ningbo ?, Xi’an, Dalian ?, Qingdao ?, Taiyuan, Fuzhou ?, Shenyang ?, Wuhan, Hangzhou ?, Shenzhen ? All regions Up to 25% Up to 35% Up to 49% ? Market with CMCC presence Source: US Trade representative, EU, Goldman Sacks report, BCG analysis Timeline Affected regional markets Foreign investment allowed Foreign playes wanting to invest in the Chinese mobile industry have to invest in existing operators WTO 15 A THIRD LOCAL PLAYER IS LIKELY TO ENTER THE MARKET IN ADDITION TO FOREIGN COMPETITORS CMCC Uni 3rd player + Intensify internal petition to strengthen local player Opening up to MNCs Competition will be intensified for CMCC and Uni even before foreign players enter MNC Market CNC ? Approved CMCC and Uni to go IPO in overseas markets to raise capital ? Awarded Great Wall’s assets (former PLA owned cellular operator) to Uni ? Third cellular operator license is expected to be issued and it is widely anticipated that China Tele will be the candidate PLA: People Liberation Army Government actions so far ... Government plans going forward ... WTO 16 TELECOM OPERATORS ELSEWHERE HAVE BEEN HIT HARD AS COMPETITION INTENSIFIES Source: Merrill Lynch, BCG analysis SmarTone in Hong Kong Cell in the UK SmarTone share of new subscribers Cell share of new subscribers 010203040509/96 6 months later 010203040503/96 One Year Later Impacted by launch of petitor’s CDMA service Impacted by petitor’s improvement of work coverage and quality WTO 17 CURRENTLY CMCC DOMINATES THE MARKET BUT CHINA UNICOM GROWS FAST ... CMCC currently the clear market leader ... … but China Uni catching up fast 938683 8279 777671417 1820212002040608010098 99 00 0 1 ( E ) 0 2 ( E ) 0 3 ( E ) 0 4 ( E )Market share (%) CMCC China Uni Other 6257372010317101433631101605010015020025030035040099 00 0 1 ( E ) 0 2 ( E ) 0 3 ( E ) 0 4 ( E )Subscriber growth rate % Uni CMCC Source: Goldman Sachs Report, BCG analysis Competition 18 ... HOWEVER, UNICOM HAS NOT BUILT UP ANY SIGNIFICANT REGIONAL STRONGHOLDS SO FAR Market share Total of subscribers China Uni CMCC Guangdong Zhejiang Jiangsu Liaoning Shandong Fujian Henan Shanghai Hebei Beijing Guangxi Tianjin Hainan 18%(1) (1) In CMCC(HK)’s market, China Uni took an average market share of 12% 40% Competition 19 ALTHOUGH THE PERSPECTIVE OF STANDARD MIGRATION IS VAGUE, CHINA IS FAST APPROACHING 3G 2 G () GSM (supported by Ericsson, Nokia) PDC CDMA one (supported by Qualm) 3 G (384K~2M/second) TDSCDMA (supported by Da Tang, Siemens) WCDMA (Supported by Ericsson, Nokia, NIT DoCoMo) CDMA 20233X (supported by Qualm) G (64K~144K/second) GPRS CDMA20231X Now 2023/2023 2023/2023 China Europe Japan USA Technology 20 Wireless data growth forecasts US Wireless data growth forecasts Europe THE ADVENT OF WIRELESS DATA WILL DRIVE GROWTH Service Offerings Will Bee More Complex As a Result 01020304050602023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023O V U M 1 9 9 8F o r r e s t e rY a n k e eD a t a q u e s t 0 9 9 9S t r a