| BUSINESSWEEK ONLINE : JUNE 14, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN COVER STORY
Chen Brothers, Innovators, Internet telephony, China (int'l edition) CHINESE ENTREPRENEURS FRUSTRATED BY A MADDENING bureaucracy can find hope in the tale of the Chen brothers. The brothers from Fujian province, Chen Zhui, 36, and Chen Yan, 30, have played Davids against the Goliath of China Telecom. They scored a victory in January, when an appeals court ruled that the Chens hadn't committed a crime by offering Internet telephony service at rates far cheaper than China Telecom's--and that the police had violated the Chens' rights by shuttering their operation. The Chens have not yet triumphed--the bureaucracy is still fighting back. But their bold moves nonetheless are fostering change in China's antiquated telecom industry. Back in 1997, the Chens didn't set out to be revolutionaries. Chen Zhui, an unassuming government clerk, just wanted an inexpensive way to speak to his wife in Indiana, where she had gone to help care for her immigrant parents. So Chen Zhui, a techie and Internet fan, convinced Chen Yan to set up an Internet telephony service in Chen Yan's electronics store in Tingjiang. ''It was fun--and cheap,'' recalls Chen Zhui, who had built his own Intel-powered PC. They offered a five-minute free call to reward customers. Soon, villagers came in droves to talk to relatives in the U.S., so the Chens figured they should offer longer calls to customers willing to pay. Chen Zhui tried to get approval, going from one government office to another. ''There was nothing that said it couldn't be done,'' he recalls. The Chens started charging clients just 70 cents a minute, vs. China Telecom's $2.20. That sure got China Telecom's attention. Within months, the police detained the Chens and confiscated their homemade computer. Charged with operating an illegal business, they were fined $6,000. The Chens decided to fight back. Chen Zhui found a lawyer and went to court. They lost the first round. But the appeals court in January ruled in their favor, ordering the lower court to reconsider the case. Suddenly, the Chens became minor celebrities, appearing often on state-run TV. The government then announced a six-month trial period for Internet telephony, with four big, state-owned companies permitted to offer service. One of the winners: China Telecom. The Chens are still not back in business. Pending a lower court decision on their case due by July, the police are holding on to the $6,000 and the Chens' computer. Even if they win, though, it's unlikely the brothers will be able to capitalize on the opening they helped create. They'll have to settle for a moral victory--but it's a mighty one. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 The Stars of Asia RELATED ITEMS Chen Brothers, Innovators, Internet telephony, China (int'l edition) ONLINE ORIGINAL: ``We Didn't Think We Would Become So Famous'' (int'l edition) INTERACT E-Mail to Business Week Online | |||
