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AUGUST 18 , 2000 VOL. 26 NO. 32 | SEARCH ASIAWEEK
Edward Tian is laying the fattest data pipes ever By FONS TUINSTRA Shanghai ALSO: • Control Issues for Telcos: A Net pioneer sees China competition ahead He is still sweating when he comes running out of a room in his temporary office in Shanghai. Edward Tian has been talking to 30 new employees about his company, China Netcom Corp-oration, but he looks more like a boxer emerging victorious from the ring. Tian has reason to be excited. As the head of the mainland's third-largest telecom provider, he is out to change the way China communicates — and at the same time prove that a new breed of state-owned enterprise can succeed. "Very soon we will talk about good and bad companies [instead of] foreign and state-owned companies," he says after he has freshened up. The offices of his ten-month-old business are still under construction but several floors below, the first of 20 data centers along CNC's state-of-the-art fiber optic backbone is nearly complete. By the third quarter of this year, cables connecting 17 Chinese cities will offer cheap broadband access across the eastern portion of the country. It is a service that's sorely needed. China's limited bandwidth is considered the main obstacle to Internet growth. CNC's 20 gigabyte network will be the largest and fastest in the world. Tian's motivations are partly personal. He wants to connect his mother in China with his daughter in San Francisco. "Just imagine if a grandmother could watch her granddaughter grow up and talk to her over the Internet, even though they are living in different parts of the world," he says. The idea of being in on the transformation of China is also alluring. Tian, 37, was born in Beijing to two Soviet-trained scientists who were sent to re-education camps during the Cultural Revolution. He later earned a master's degree in biology from the Chinese Academy of Sciences. But he wanted more training and felt he couldn't get it from the Chinese education system, which was still recovering from years of devastation under Mao Zedong. So in 1987 Tian packed his bags and headed for the U.S., where he earned a Ph.D. in environmental management from Texas Tech University. A new China was emerging though and Tian's first contact with it came in 1991, when he returned for a visit. Deng Xiaoping had recently made a tour of the southern region to reinvigorate economic reforms and Tian was amazed with what he saw during a train ride from Shenzhen to Guangzhou. "Everywhere along the railway track construction was going on," he says. "Even at night the farmers continued to build. They were very much in a hurry to make something of their lives, now that they had the chance." That night, he wrote a teary letter to his wife vowing that they would be part of the process. He began to fulfill that pledge two years later when he teamed up with James Ding in Texas to found AsiaInfo, an Internet infrastructure and software company. The business grew and in 1995 Tian left his wife and daughter behind in San Francisco and moved AsiaInfo to the mainland. During the next four years, he oversaw nearly 100 major network projects, including ChinaNET, Shanghai Online and China Financial Data Network. "China is a unique place, a new frontier," he says. "You can still have impact as a person here, much more than you can have in the United States." His achievements did not go unnoticed. Last year, Tian was asked to become president and CEO of China Netcom, a venture set up by the Chinese Academy of Science, the State Admin-istration for Radio, Film and Television, Shanghai Municipality and the Min-istry of Railway, which allows CNC to run some of its lines along the same paths as the railroads. The government has given Tian leeway to make CNC an open and competitive company. He's instituted company statutes based on American principles of corporate governance and recruited executives from the likes of Motorola, Microsoft and Hewlett-Packard, luring them with stock options and a strong vision. "I told them about how we are going to change China," he says. "All those working for me now got excited within 15 minutes." China Netcom is up against some formidable competition. China Telecom is now the main provider of Internet access in the mainland. Almost every Internet service provider in China relies on the former monopoly for backbone access to the Internet. The first battlefield will be Shanghai. It is the only place at the moment where the central government allows the convergence of telecommunications, cable television and the Internet. Once the Shanghai system is in place, however, other parts of the country are expected to follow suit. China Telecom is already offering ADSL connections to half the city's residents and offices, using traditional copper phone wire. ADSL is up to 100 times faster than normal dial-up connections. But marketing for the service has been limited and demand so far has been low. China Netcom's strategy is different though. It will supply network access to cable provider Shanghai TV and let it handle the expensive job of bringing broadband into homes. Tian wants to avoid the consumer market, at least for now. Instead, he plans to make CNC China's first bandwidth wholesaler, targeting multinational corporations, telephone companies, state offices and Internet service providers, including China Telecom. CNC will also offer enterprise solutions, IP services management, Web hosting and voice-over- IP services, which provide cheap phone calls over data lines. Investment will be crucial to Tian's success in the capital-intensive telecom industry. In its first phase, CNC will spend $600 million, most of which comes from commercial loans issued by two Chinese banks. Eventually, Tian hopes to take the company public. "It gives you good discipline if you are publicly listed," he says. "You have to be more responsive when you are facing international investors." For now though he is focused on matters at hand. He takes a short tour through his data center, where workers are setting up equipment. By September, the job will be complete. "We will throw a party then," says Tian. There will be little time for relaxing however. The race to capture China's broadband Internet market has only just begun. Write to Asiaweek at mail@web.asiaweek.com
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