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Telstra names high flyer to boost China business

Telstra has appointed Ms Xiaowei Chen to the role of CEO Telstra China: a market from which it aimed to generate $1.0b in revenues by 2013, but where it is still well short of this figure.

The group managing director of Telstra International, Tarek Robbiati, said her appointment was "the result of an extensive international search for the right person to drive continued growth and shareholder value from Telstra's business interests in China."

"Xiaowei's in-depth knowledge of China's new media space and proven ability to adapt and deliver in the fast moving online sector provides the experience required for Telstra's continued growth in China."

She may face considerable challenges in achieving this "continued growth". Telstra's presence in China shrank considerably last year with the sale, for close to $0.5b, of its 50.6 percent share in Chinese Internet property SouFun. Then Telstra suffered another setback, reporting in its half year results in February 2011 a $133m impairment charge against the carrying value of its Octave business in China following regulatory changes that constrained the Wireless Application Protocol (WAP) market in China.

Telstra had ambitious goals for China. In February 2009 it acquired a 67 percent interest in both China M and Sharp Point saying the moves were part of strategy to achieve $A1.0b in revenue with strong margins and cash flow from its Chinese media assets by 2013. However in FY2010 it managed less than 25 percent of this target.

In its annual results announcement for FY2010, Telstra said: "Our Chinese online business (which includes our interests in SouFun and Sequel) delivered a solid performance with revenue growth of 16.4 percent to $234m."

Telstra CEO David Thodey was less than bullish about Telstra's prospects in China earlier this year. In March, after addressing the Asialink conference in Melbourne he was asked: "How do you see China as a market for Telstra?" He replied: "We have 6000 people offshore and two and a half thousand in Hong Kong and we have been very active in what we call digital media'¦We see a bright future in terms of working in China but the market is a little heated so we might just bide our time."

Announcing Chen's appointment, Telstra said of its involvement in China: "Telstra has been active in China for more than 21 years and currently has offices in Beijing, Shanghai, Guangzhou and Hong Kong. Through our partnerships, Telstra has a leading position in the Chinese online advertising market including the auto, IT and consumer electronics and mobile value added service segments.

"Also using our own extensive network assets and those of our Chinese partners, Telstra provides enterprise customers with highly competitive managed network and international connectivity solutions, meeting and exceeding the needs of customers operating across, into and out from the Greater China region and across the world."

Chen was born in China and educated in China and America. Prior to joining Telstra she was CEO for Orange Sky Entertainment Group, an integrated entertainment company including production, artistic management, advertising and new media. She has also been president of The9 Limited, president of China.com, a consultant with McKinsey & Co and was anchor and executive producer for China Central Television. She holds a PhD from the University of Pittsburgh, USA. She will be based in Beijing and will report into Robbiati.

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