China’s unwieldy telcos

A minor reshuffle of China Telecom is a chance to throw the spotlight on the Byzantine leadership structure of Chinese telcos, and the usually discreetly unmentioned role of the party.

First,  the change. Wang Xiaochu has relinquished the position of president of the China Telecom parent, but takes on the new post (new to China Telecom that is) of chairman. He is still party secretary. Yang Jie, previously vice-president, replaces Wang as president of the parent and also takes over as president and COO of the Hong Kong and New York-listed subsidiary. Wang retains the roles of chairman and CEO of the listed firm.

China Telecom (whose website touts its awards ‘Asia’s Best Managed Company’) did not explain why it took nearly three years to comply with a ruling from the state asset management agency, SASAC, requiring state enterprises to separate out the president and chairman positions. The other telcos, China Mobile and China Unicom, have long since made the reform.

It appears aimed at standardising the structure of state-owned businesses, but the actual impact is minimal, and seems more to do with nomenclature.

But if having two companies running one business isn’t unwieldy enough, there’s also the role of the party secretary. As well as ensuring the company follows the party line the top party post also oversees promotions.  Indeed, senior positions in SOEs are all Communist Party appointments.

Yet although the party calls the shots, its role is rarely discussed and is certainly never mentioned in any prospectus.

At Telecom and Unicom, we can see the chairman is also the party boss. Over at China Mobile, Wang Jianzhou  gave up the post several months ago to former MIIT vice-minister Xi Guohua.

The lesson in all this is that Chinese telcos are vastly more complex and cumbersome than we imagine. Plus,  the party’s bashful exercise of power means that the limited transparency of the listed companies gives us little insight into how they are being run. 

Chart: Telecom mandarins

Operator	Official	Titles
China Mobile Group	Wang Jianzhou Xi Guohua Li Yue	Chairman Party secretary, vice chairman President, director
China Mobile Ltd	Wang Jianzhou Xi Guohua Li Yue	Chairman Executive director, vice chairman CEO, executive director
China Telecom Group	Wang Xiaochu Yang Jie	Chairman, party secretary President
China Telecom Corp.	Wang Xiaochu Yang Jie	Chairman, CEO President, COO
China Unicom Group	Chang Xiaobing Lu Yimin	Chairman, party secretary President, vice-chairman, deputy party secretary
China Unicom Ltd	Chang Xiaobing Lu Yimin	Chairman, CEO President, executive director

Key - Parent company: red. Listed subsidiary: blue

Source - Company filings, websites