China-Europe cooperation in the telecommunications: the case of China Unicom/Telefónica, 2002-2016

Abstract

This research seeks to explore the driving forces behind the diverse pathways of telecommunications and, in particular, the rationale for international alliances in the context of globalisation and the extension of the value chain induced by technological change. It attempts to answer two interrelated questions: from China's side, why Telefónica and from this operator's side, why China? China was looking for a reliable technology partner for its weak market segments and a bridge to Latin America. Telefónica ambitioned to expand its mobile customer base in a country with high growth potential (NYT) while reducing through economies of scale equipment supply costs in an oligopolistic market. The research adopts a case study methodology and focuses on the service operators China Unicom and Telefónica de España in the years after the dotcom crash and before the arrival of the Covid-19 pandemic. The investigation is based on sources from the companies involved and relevant documents from specialised institutions. The study finds that the need for cooperation in the knowledge and capital-intensive services and the coincidence in strategies led to the frame of international alliances of companies.