China Telecom Reveals Incubation Program Details
IT Times, 2/06/12
China Telecom (NYSE: CHA; 0728.HK) recently issued detailed plans for its in-house incubation program, established an 800 square meter incubator base in China Telecom Information Park in Shanghai, and began group-wide innovation staff recruitment after the Chinese New Year holiday (January 22-28).
According to a source involved in the project, the program involves teams through China Telecom Group and covers mobile internet, cloud computing, and e-commerce. Each team, typically comprising 3-8 people, will be relocated to the Shanghai incubator to work on their project full-time and receive financial support once their project plan is approved by an evaluation committee. The initial incubation stage is expected to last 3-6 months, followed by a second stage in which each project team will incorporate as a wholly-owned subsidiary or joint venture. Team members will retain their existing job position for 1-2 years with their wages frozen, and can choose to return to their previous job at the end of the incubation period. During the second stage, start-ups can receive up to RMB 5 mln in funding. Once they have entered the marketplace, start-ups will also be able to raise external funds through an IPO. According to one source involved in the project, response to the recruitment posting, which went up several days ago, has been very strong.
According to an industry source, innovation has been a major obstacle for state-owned enterprises such as China's telecom operators due to their inability to tolerate failure, make fast strategic decisions, or incentivize employees. The incubator project creates a safe environment for employees to take risks. The source added that China Mobile (NYSE: CHL; 0941.HK) and China Unicom (NYSE: CHU; 0762.HK; 600050.SH) have launched similar programs but not publicized them.
Editor's Note: For more background on this topic, please see "China Telecom to Encourage In-house Innovation" MD 1/31/12 issue.
Keywords: strategy China Telecom e-commerce Internet telecom wireless cloud computing 0728.HK CHA mobile Internet HR
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