China’s rapidly changing telecommunication sector is not only a playground for the four operators. AsiaInfo Holdings Inc., a Beijing-based provider of telecom software and information technology security products and services in China, also has its share in shaping this landscape. Its CEO Steve Zhang talks to Amy Cheung of The China Perspective on what is the company’s role in transforming China’s telecommunications industry.

TCP: Are you satisfied with the earnings report released on Jan 25? What would be your forecast for the company’s performance in 2007?
Steve Zhang: We are very happy with our 2006 fiscal report that is boosted by strong demands for solutions and services in Chinese market. Revenue rose 66% to US$32.1 million from US$19.4 million. Net revenue, which excludes third-party hardware costs, was US$25.4 million, a 58% year-on-year increase. Our main growth point is the telecom solutions that enable various operators to provide better customer services and help them penetrate rural markets. We target to retain strong growth in 2007 with 15 to 20% year-on-year. While we plan to fuel 15 to 20% year-on-year growth in our telecom solutions business, growth in IT security products and services would be around 50% year-on-year.

TCP: What can the China Unicom contract bring to AsiaInfo? What would be the next possible cooperation between AsiaInfo and Chinese telecom and mobile operators?
SZ: We will help China Unicom to build a business customer support system to provide better services for its corporate clients. We have been working with China Unicom since 1999 and this contract serves as a good platform to continue provide telecom solutions and services. At the same time, China Mobile is our largest client. We provide customer care, data warehousing, call center services and business intelligence solutions. For China Telecom, we provide fixed line and broadband solutions.

TCP: What can AsiaInfo bring to China’s telecom industry?
SZ: China’s telecommunication sector is very competitive. Since urban markets have reached certain level of saturation, Chinese telecom operators want to expand to uncultivated rural markets in order to differentiate themselves from their competitors. AsiaInfo wants to be one of the drives for growth by improving their customer services and pinpointing customer segment.

TCP: Does AsiaInfo expect new growth points with the coming 3G license?
SZ: If China Telecom successfully obtains the 3G license, AsiaInfo will participate in 3G-related building services; If China Mobile obtains the license, we will provide tools to enable the operator can support 3G. There will not be as many changes for the operator since China Mobile is already on 2.5G level.

TCP: Can you tell me what is AsiaInfo’s share of Chinese market? What accounts for your leading position?
SZ: AsiaInfo has secured 25% of the total market in the mainland. We strive to expand it through cultivating new customers, major acquisitions to expand our existing customer base and obtaining contracts as well as cooperation opportunities with provincial subsidiaries of Chinese operators. Having been working in the market for over 10 years, our advantages over Chinese market are resulted from our long cooperation and relations with our clients that is backed by a professional team that we have built up.

TCP: What are Chinese SMEs’ demands towards security products and IT services? How would Lenovo-Asia-Info cultivate this market?
SZ: China’s IT security market is growing very fast. On one hand, with increased IT system size and operational scale, companies are increasingly concerned with network security once the broadband is connected; On the other hand, there are more virus, hacker attacks and breaking that threaten the essential security and stability a business operation need to retain.

TCP: What is AsiaInfo’s next step?
SZ: We will continue to invest in developing solutions and strengthening marketing and sales efforts as well as corporate sales activities.

TCP: What do you think about china’s telecom sector?
SZ: China’s telecom sector enjoys a very dynamic market. More than a decade ago when AsiaInfo was first established in China, there was zero mobile user. Although the total number of subscribers has grown to 451 million, the market is still sustainable and offer great room for substantial growth. The sector would grow with broadband and Internet business as well as the Internet population.