China's telecommunication sector is starting to welcome foreign players. More foreign telecom companies are expected to come in following the establishment of the Shanghai Free Trade Zone's new Lingang area.

In the beginning of this year, British Telecom obtained licenses to provide corporate VPN and internet services to foreign firms in China. While domestic Chinese telecom firms dominate services for individual users, there are actually more than 120 foreign telecom firms in the market – most of them providing value-added internet services. Experts believed their emergence in the domestic market will energize China's domestic telecoms industry.

"The business development of domestic telecom carriers has been pretty fast and they are adjusting the whole industrial structure," said Wang Chao, vice chair of IEEE China Council, "…domestic carriers focus more on value-added services. British Telecom's business expansion will inject new energy into the market and make the industry more diversified."

The Ministry of Commerce has announced that the Lingang new area in Shanghai's Free Trade Zone welcomes more foreign telecom players. In turn, that may also increase China's influence with the global telecom industry. He Renlong, chief scientist at the Shanghai Academy of Information at East China Branch, said the free trade zone will provide a better business environment for foreign telecom players.

"Instead of just setting up offices, they may be able to open their own companies. It's also possible that they would be allowed to construct submarine cables. But more importantly, if Lingang can attract more foreign mobile carriers to come, it would help Shanghai's reputation as an internet gateway in Asia or even worldwide," he added.

Most of the foreign telecom companies are now registered in Shanghai's Free Trade Zone. With the establishment of the new Lingang area and its more liberal operating regulations, the number of foreign carriers working in China is expected to rise.