Page 25 - 2016年光通信竞争力报告(摘要版)

8 The competitiveness report on "the Top 10 competitiveness enterprises in the optical communications industry of China & Global market in 2015” (Abstract Edition)

Figure 3 ranking changes over the years of the tope10 competitiveness Figure 4 ranking changes over the years of the top 10 competitiveness
enterprises in the industry of optical transmission in China enterprises in the industry of optical components

Source: Network Telecom Information Institute. Source: Network Telecom Information Institute.

Figure 5 ranking changes over the years of the top 10 competitiveness Figure 6 ranking changes over the years of the 10 competitiveness
enterprises in the industry of optical communication enterprises in the industry of optical fiber and cable

Source: Network Telecom Information Institute. Source: Network Telecom Information Institute.

factors affecting business, most optical communication industry has chosen too fast growing of the cost of labor forces, occupying about 70.06% of all the
enterprises, the maximum proportion; and those choosing too fast growing of the price of raw material is less than those choosing labor forces, accounting
for 65.08% of all while those choosing increasing of risk of foreign exchange fluctuation takes up 49.86%. Influence of too strict environmental regulation on
business operation is the minimum, taking up 31.60%.

(5) Short supply of medium and high ranking of talents has become one of the bottlenecks for optical communication industries; and generally speaking, it is
difficult for optical communication enterprises to recruit various levels of staff. Enterprises having difficulty in recruiting technicians, senior management talent
and engineers respectively takes up 54.19, 54.11% and 48.13%, showing serious market structural unemployment.

In the process of selection which lasts for 9 years, we have witnessed various opportunities and challenges that optical communication industry has gone
through step by step till occupying 60% of the global market share currently, from weak to strong. Globally speaking, Huawei, YOFC (Yangtze Optical and
Cable Joint Stock Limited Company), ZTC (Zhongxing Telecommunication Equipment Corporation),Hengtong and FiberHome rank from 1st to 5th in sequence
respectively in each field and they are pride of Chinese optical communication industry. We hope that more Chinese optical communication enterprises will
rank global top 10 in the near future.

In the process of monitoring competitiveness of optical communication industry in the previous 9 years, we have accumulated lots of datas and materials of
those enterprises and improved our supervising methods. We have decided to compile business index and forecasting and early warning system in the field of
optical fiber and cable industry in 2016, to issue the index and forecasting and warning system in each season, in half a year and in one year respectively. The
aim is to help enterprises in the optical fiber and cable industry know about the current development status of the industry and to forecast trend in the future,
achieving a signification of guidance and a practical value.

This system applies industrial business index, warning signal system and rough set — a neural network model to monitor the optical fiber and cable industry.
Based on constructing the system of monitoring index in this industry and making pre-processing, time difference related analysis method and peak-to-valley
correspondent method are applied to divide the index in three groups: those in the leading position, those almost simultaneous and those behind. By combining
theoretical analysis and practical condition in the optical fiber and cable industry, 45 indexes are initially selected out, mainly classified in four parts: macro-
economic index affecting development of the fiber and cable industry, equipment supplying index, index in the upper and down chain of this industry and core
index in this industry itself. After making pre-processing and adjusting the index, it is finally confirmed that 10 index are in the leading position, 4 index are
simultaneous and 4 index lagging behind (please refer to the 4th page of this report to see the relevant index, system instruction and calculation methods).

By compiling business index for the optical fiber and cable industry, development status of this industry can be comprehensively described, the business
fluctuation range can be reflected and the periodical fluctuation trend can be forecasted. The leading index are used to forecast the trend of change in the
industry, the simultaneous index are used to reflect the current development status and index falling behind are used to judge whether some state of this industry
has started or come to an end, which can be referred as evidence to make revision to the previous circle of polices. As is evidenced by our initial simulation
operation, the leading business index surpasses the simultaneous index for about 2 to 3 months in average and the index behind falls for 2 months. Then, by
combining 3σ principle and experts’ experience to build critical value of dividing the warning index, a warning signal light system is established. In the next
step, the indication in each phase and the comprehensive warning index state are marked in a way similar to the traffic signal lights, thus, the whether the optical
fiber and cable industry is hot or not can be directly indicated and trend in the coming season or longer term of this industry can be forecasted with warning
degree. Therefore, the aim of warning the fluctuation of this industry could be achieved and this can be used as guidance for making decisions accordingly.

At last, on behalf of all members of the review group of “Top 10 Competitiveness Enterprises in the Optical Communication Field of China & Global market
during 2014-2015”, may I express my gratitude again to all colleagues’ help and support for the selection events in the past 9 years! Thank you!

Full-time Member of Standing Committee on Communication Technology of Ministry of Industry and Information Technology Mao Qian
Chairman of Asia-Pacific Optical Communications Committee
Chief Editor of "Network Telecom" Magazine
Sept 2015