Asia Briefing: What makes a true monopoly?

A pedestrian holding an umbrella walks past a China Mobile store in Dalian, China. Photograph: Tomohiro Ohsumi/Bloomberg

A pedestrian holding an umbrella walks past a China Mobile store in Dalian, China. Photograph: Tomohiro Ohsumi/Bloomberg

Tue, Sep 17, 2013, 01:00

One of the livelier debates at the World Economic Forum was between Li Zhengmao, vice president of state telecoms operator China Mobile, and Zhang Weiying, an economics professor at Peking University, over the popular WeChat instant messaging service.

Zhang said China Mobile needed to drop its position as a monopoly if it wants to form alliances with other companies and offer innovative internet- based products.

Li responded by saying that the state-owned China Mobile, which has two- thirds of the mobile phone market, could not be considered a monopoly because it faces competition from two other telecoms companies: the state-owned groups China Unicom and China Telecom.

“My colleagues and employees do not understand why we are considered a monopoly,” he said in the Global Times. He insisted China Mobile’s position with 745 million customers, and with would-be competitors blocked by the government, was not a monopoly.

Li said that WeChat, a smartphone application that allows users to exchange text and voice messages using the internet, was a monopoly.Why?

“Because no other products can compete with it,” Li said.

WeChat had 500 million users in China and 100 million more overseas in August. It was introduced in 2011.

Its competitors include China Mobile’s Feixin and Line, developed by Korea Line Corporation, both of which have far smaller shares of the market.

The economist Zhang noted that monopolies are created when the government bans businesses from entering a particular market by establishing certain policies or laws.

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