BIG INTERVIEW: Deng Xiaofeng, CEO, China Telecom Global
Chinese investment continues to pour overseas, presenting a major opportunity for the international arm of China Telecom to support Chinese enterprises. Agnes Stubbs exclusively talks to China Telecom Global CEO Deng Xiaofeng.
“A peaceful family will prosper,” goes a widely embraced Chinese saying. A trait held in high esteem by the Chinese, benevolence has extended past family ties to social and business relationships, exhorting characteristics and virtues such as harmony and cooperation.
Deng Xiaofeng, CEO at China Telecom Global (CTG), has certainly kept a strong focus on harmony and cooperation as he has led the company through a remarkable period of global expansion.
China Telecom first entered the international wholesale market in 2000, going on to launch three subsidiaries - China Telecom Hong Kong, China Telecom Americas and China Telecom Europe. In 2012, Xiaofeng was brought into lead China Telecom Global, which oversees all three business units.
CTG boasts an impressive global network. Covering 72 countries across Asia, North America, Latin America, Europe, the Middle East and Africa, it has 63 PoPs and over 33 subsea cables and high speed terrestrial links.
Such an extensive network is helping to support the phenomenal growth of Chinese enterprise activities overseas, with KPMG predicting that Chinese outbound direct investment could reach $1.25 trillion in the next decade.
‘One Belt, One Road’
National strategic initiatives such as the ‘One Belt, One Road’ project highlight the vast investment being poured from China into overseas infrastructure.
First announced in October 2013 by Chinese president Xi Jinping, the programme aims to establish an infrastructure network connecting countries situated on the original Silk Road through Central Asia, West Asia, the Middle East, Europe and Africa.
There are two parts to the initiative. First is a new ‘Silk Road Economic Belt’ linking China to Europe that connects through Central Asia. The second is the ‘Maritime Silk Road’ connecting Chinese ports to Africa, which extends further through the Suez Canal in Egypt to the Mediterranean. Approximately 65 countries have agreed to participate in the project that, when completed, could impact as many as 4.4 billion people.
Further details of the initiative were released in March 2015 by the National Development and Reform Commission, the Ministry of Foreign Affairs and the Ministry of Commerce.
“Our focus is on the Euro-Asia passageway, the Greater Mekong sub-regions and also, Africa,” says Deng. “A lot of Chinese enterprises are going abroad on this initiative so there is huge demand to be met.”
With substantial experience in deploying and maintaining networks, CTG will look to help developing countries along the ‘One Belt, One Road’ initiative roll-out and modernise their networks.
One of the most ambitious initiatives the Chinese government has ever introduced, executing and implementing the ‘One Belt, One Road’ initiative will require the support and collaboration of all stakeholders involved, says Deng.
“This is not just a financial agreement. Building this is going to take time. Every carrier has a different service and maintenance level. The more carriers and partners you have, the more communication is needed,” he says. “From Euro-Asia to Central Asia to the Middle East and Africa, we want to help developing countries there and decrease the difference between the services in the developed and developing countries.”
At the same time, he says it offers CTG the opportunity to explore new territories and investment along those countries.
Presently CTG has six terrestrial cables and two subsea cables that run through the Euro-Asia passageway. Last year, China Telecom Europe (CTE) signed a memorandum of understanding with Turk Telekom International (TTI) to collaborate on providing telecoms and IT services to Chinese enterprises operating in Turkey and the surrounding Central and Eastern European regions.
CTG is looking for further partners in the region as it aims to deploy another route along the Euro-Asia passageway. “We are negotiating with several providers,” says Deng.
Growth and expansion
In the last year CTG has increased its overall revenue by 30%. The operator is aiming for further growth by expanding both its network and service portfolio.
In April, it announced that it was working with six regional partners to launch the New Cross Pacific (NCP) cable network project, which will connect mainland China, Taiwan, Korea and Japan to the US. Scheduled to begin operations by 2017, the project aims to offer the lowest latency route between Asia and North America.
In June, it also launched a new subsidiary focussing on Africa and the Middle East. It is a significant milestone for the company, says Deng, adding that its presence will not only support the Chinese government’s ’One Belt, One Road’ strategy but also meet the demands of the increasing number of Chinese corporations abroad.
CTG also plans to grow its service portfolio by developing high bandwidth, OTN and ultra-low latency products for next-generation networks.
Deng sees the cloud market as having huge potential for the company moving forward. “We see many Chinese enterprises abroad requiring cloud and we believe we have a strong role to play in helping them improve their services,” says Deng.
He points to the overseas expansion of Chinese internet companies like Alibaba, Tencent and Baidu which require secure and robust IT support.
“This is a very important area for us” he adds. “We will seek to launch cloud computing services covering Europe, North America and Asia-Pacific – countries along the One Belt, One Road initiative. We will aim to meet the demands and requirements from Chinese enterprises and continue to deliver on the cloud computing story.”
In a fast-growing and mature industry such as telecoms, successfully harnessing Big Data and analytics could help carriers increase revenue and profits, says Deng. “Carriers have an advantage as they have a significant amount of data from their customers. Through the analysis from Big Data, there will be handy information that can help carriers create new services and products,” he notes.
Through its partnerships with global carriers, the operator is also looking to provide Chinese enterprises with solutions such as video conferencing, international voice services and local internet access. ICT will also be a key area of opportunity for the company. “I don’t think there is huge potential in traditional communications. For ICT, there is a lot,” he notes.
An open minded partner
Deng talks at length about “cooperation”, “partnership” and “collaboration”. When asked what CTG looks for in a partner, he identifies “an open mind”.
“We are open to working with carriers which would like to cooperate with us – as long as they can deliver, supply and provide those services with quality,” he says.
The Chinese way, he says, is to promote cooperation and collaboration. “It is important to understand the culture around the way we work. Peaceful and helpful – that’s the Chinese culture and we aim to bring that to our working relationships.”
With over 30 years of experience in telecoms under his belt, Deng was appointed general manager of China Telecom's Shen Zhen unit in 2005 and has seen his career grow in parallel with the company.
Deng says the rapid changes in the industry have made for a challenging and rewarding career. “It has been a rewarding journey as I have been able to study and learn from my colleagues and partners. I have seen big changes in our industry at CTG and consider myself quite lucky,” he says.
The telecoms industry, Deng argues, is one of the few which accurately reflects the present development and state of the world. “Changes in the telecoms industry have an impact on an entire society. It changes not only their way of thinking, but their day-to-day living too. It reflects a society, a country and the world,” he observes.