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                                                                   EXHIBIT 10.12

                         MATERIALS PROCUREMENT AGREEMENT

                                 BY AND BETWEEN

                      CHINA NETCOM (GROUP) COMPANY LIMITED

                                       AND

                 CHINA NETWORK COMMUNICATIONS GROUP CORPORATION

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                         MATERIALS PROCUREMENT AGREEMENT

      THIS AGREEMENT is made and entered into on [-], 2004 in Beijing, People's
Republic of China ( "PRC") by and between the following parties:

      Party A:                 China Netcom (Group) Company Limited

      Address:                 Building C, No.156, Fuxingmennei Avenue, Xicheng
                               District, Beijing, PRC


      Legal representative:Zhang Chun Jiang

      Party B:                 China Network Communications Group Corporation

      Address:                 No.156, Fuxingmennei Avenue, Xicheng District,
                               Beijing, PRC

      Legal representative:    Zhang Chun Jiang

      On the basis of equality and reasonableness, after friendly negotiation,
both Party A and Party B reached the following agreement in respect of the
relevant matters in relation to Party B (including the branches and subsidiaries
of Party B and other units controlled by Party B; the definitions employed below
are the same) providing materials procurement services (hereinafter referred to
as the "Materials Procurement Services") and the related storage, warehousing
and transportation services to Party A (including the branches and subsidiaries
of Party B and other units controlled by Party B; the definitions employed below
are the same). and that Party A's procurement of some kinds of materials
directly from Party B (hereinafter referred to as the "Direct Materials
Procurement"):

1.    BASIC PRINCIPLES

1.1   In respect of the materials procurement services and the related storage,
      warehousing and materials procurement services provided by Party B to
      Party A as well as the self-operated materials sold directly from Party B
      to Party A under this Agreement, Party B shall have the right to receive
      reasonable service charges or payments for materials as priced in
      accordance with the stipulations of this Agreement. Party A shall fulfill
      its corresponding obligations of payment.

1.2   The conditions of the materials procurement services and the related
      storage, warehousing and materials procurement services provided by Party
      B to Party A as well as the self-operated materials sold directly from
      Party B to Party A shall not be inferior to the conditions of the same or
      similar services or materials that Party B provides to any third party.

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1.3   If Party B fails to provide the materials procurement services and the
      related storage, warehousing and transportation services or materials
      under this Agreement for reasons not because of its own fault or if it
      fails to provide such services or materials completely, Party B shall
      inform Party A in writing immediately and Party B shall make its best
      endeavour to assist Party A in obtaining the same or similar services or
      materials through other channels.

1.4   In providing the materials procurement services and the related storage,
      warehousing and transportation services or materials provided by Party B
      to Party A as well as the self-operated materials sold directly from Party
      B to Party A under this Agreement must comply with the purposes agreed by
      both parties and the relevant standards prescribed by the State.

1.5   For any loss one party causes to the other party under this agreement due
      to breach of terms of this agreement, the party in breach should bear the
      responsibility of making timely and complete compensation for breach of
      contract to the other party, including, but not limit to, direct or
      indirect losses caused to the other party due to breach of contract.
      However, the party in breach is not responsible for loss caused to the
      other party due to force majeure.

1.6   In the course of either party performing its duties under this Agreement,
      the other party should provide reasonable and necessary assistance to that
      party.

2.    BASIC CONTENT OF MATERIALS PROCUREMENT SERVICES, DIRECT MATERIALS
      PROCUREMENT AND RELATED WAREHOUSING AND TRANSPORTATION SERVICES

2.1   The materials procurement services provided by Party B to Party A under
      this Agreement include but are not limited to:

      (1)   imported telecommunications materials procurement;

      (2)   domestic telecommunications materials procurement;

      (3)   domestic non-telecommunications materials procurement.

            The above-mentioned procurement services include tender management,
            technical specifications review and approval and installation
            services.

2.2   The products Party B sells directly to Party A are mainly cables, modems
      and yellow pages telephone directories, etc.

2.3   Party B also provides Party A with the storage, warehousing,
      transportation services related to materials procurement services and
      direct purchase of materials.

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3.    PRICING PRINCIPLES

3.1   The amount determined for the commissions for the domestic materials
      procurement services and the standardized charges therefor under this
      Agreement shall not exceed 3% of the contract volume of the relevant
      materials procurement.

3.2   The amount determined for the commissions for the imported materials
      procurement services and the standardized charges therefor under this
      Agreement shall not exceed 1% of the contract volume of the relevant
      materials procurement.

3.3   The pricing criteria in respect of part of the direct purchase of
      materials sold by Party B to Party A as set forth under this Agreement
      shall be governed by the principle in this provision and in the following
      order: those that are fixed by the State shall follow the government-fixed
      price; those that have the government guidance price shall follow the said
      guidance price; those that have no fixed price nor government guidance
      price yet have a market price shall follow the market price; those that
      none of the above said is applicable shall follow the pricing method
      agreed upon by both parties, however, the said pricing method should be
      calculated with regard to the reasonable cost and reasonable profit of the
      service, whereby "reasonable cost" means the cost agreed by both parties.

         The "State Rate" follows the Pricing Law of the People's Republic of
      China, which is set by the governmental pricing department or other
      related departments based on the pricing limits and range.

      The "government guidance price" follows the Pricing Law of the People's
      Republic of China, which provides guidance to business operators by the
      governmental pricing department or other related departments based on the
      pricing limits, basic price range and its floating range.

The   "Market Rate" means the rate determined by the business operator and
      attained through market competition. The market price shall be determined
      by the following order: (1) the rate charged by any independent third
      party providing the same kind of service in the same or surrounding area
      under normal situation; or (2) the rate charged by any independent third
      party providing the same kind of service within China under normal
      situation.

3.4   The prices and / or criteria of pricing in respect of the commission for
      the related storage, warehousing and transportation in relation to the
      materials procurement services and the direct materials procurement should
      be determined according to the market prices. The market prices referred
      herein means the prices set out by the business operators on their own
      through the market competitions.and should be set out in the following
      sequence: (1) the prices charged by an independent third party in respect
      of providing those services under normal circumstances of transaction in
      its region of provision or other nearby regions; or (2) the prices charges
      by an independent third party in respect of providing those service under
      normal circumstances of transaction in the territory of PRC.

3.5   Party B and Party A can enter into a separate execution document, which
      should stipulate clearly the actual services or materials in which Party A
      needs at that time and they should also stipulate the binding principles,
      criteria and conditions under this Agreement.

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3.6   The specific amount of service charge agreed upon under this Agreement
      shall from time to time be calculated by the accounting principle
      applicable in China (if applicable).

3.7   Both parties shall, before December 31 of every calendar year, conduct a
      review on the price of every item of service and facility stated in this
      Agreement for the next accounting year (if necessary).

4.    PAYMENT OF SERVICE CHARGES

4.1   Party A shall, based on the provisions of this Agreement, any
      supplementary agreement of this Agreement (if any), and in specific
      execution documents, pay Party B or its trustee service charge in
      consideration for the services provided by Party B or its trustee.

4.2   If Party A fails to pay on time the said service charge agreed upon under
      the provisions of this Agreement, any supplementary agreement of this
      Agreement (if any), and the specific execution documents, Party A shall,
      for each 1 day (calendar day, and the same applies below) late, pay a late
      charge penalty of 0.05% of the outstanding balance to Party B; and after
      60 days of late payment, Party B is entitled to notify Party A the
      termination of service; if Party A still fails to pay for the outstanding
      balance upon 30 days after receiving the written notice to terminate
      service, Party B shall be entitled to terminate the service immediately.
      The suspension or termination of such service shall not in any way
      prejudice or affect the rights and obligations under this Agreement prior
      to such event.

5.    RIGHTS AND OBLIGATIONS OF BOTH PARTIES

5.1   Rights and Obligations for Party A

5.1.1 Rights of Party A

      (1)   Party A (including its subsidiaries, branches and controlled units)
            has the right to receive the agreed service provided by Party B;

      (2)   The auditor of Party A has the right to inspect and examine the
            accounting books of Party B and its connected persons in relation to
            the connected transactions under this Agreement.

5.1.2 Obligations of Party A

      (1)      Guarantee and/or procure its subsidiaries, branches and all other
            controlled units to enter into specific execution documents with
            Party B and its subsidiaries, branches or controlled units in
            relation to this Agreement and/or any supplementary agreement of
            this Agreement (if any);

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      (2)      Coordinate with all relating matters with regard to the
            abovementioned specific execution documents;

      (3)      Pay the service charge as stated in this Agreement and all other
            specific execution documents;

      (4)      Guarantee to pay for any damage suffered by Party B or counter
            party of specific execution documents that is caused by the breach
            of Party A of any provisions in this Agreement and specific
            execution documents.

5.2   Rights and Obligations of Party B

5.2.1 Rights of Party B

      (1)   Party B is entitled to the service charge agreed upon under this
            Agreement;

      (2)   Right to provide the same or similar service to a third party, on
            the condition that Party B continues to provide the same service
            agreed upon under this Agreement.

5.2.2 Obligations of Party B

      (1)   Guarantee and/or prompt its subsidiaries, branches and all other
            controlled units to enter into specific execution documents with
            Party A and its subsidiaries, branches or its other controlled units
            in relation to this Agreement and/or any supplementary agreement of
            this Agreement (if any);

      (2)   Provide the services and monitor the services provided by its
            subsidiaries, branches and other controlled units at a good quality
            according to the provisions of this Agreement;

      (3)   Coordinate with all relating matters with regard to the
            abovementioned specific execution documents;

      (4)   Guarantee to pay for any damage suffered by Party A or counter party
            of specific execution documents that is caused by the breach of
            Party B of any provisions in this Agreement and all other specific
            execution documents;

      (5)   Agree to provide the auditor of Party A the accounting books of
            Party B and its connected persons in relation to the connections
            transactions under this Agreement.

5.3   It is agreed that both parties will take further actions to ensure the
      realization of the principles and

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      provisions in this Agreement. It is further agreed that both parties will
      ensure that, Party A, being a subsidiary of a company to be listed or
      listed, China Netcom Group (Hong Kong) Limited (hereinafter "Listing
      Company"), shall comply with the Listing Rules of the Hong Kong Stock
      Exchange for connected transactions.

6     PREFERENTIAL RIGHT

6.1   For the same service or materials, if an independent third party cannot
      offer better conditions and terms than Party B, Party A can grant Party B
      preferential right.

6.2   Party B undertakes to Party B that Party B shall not offer the same or
      similar services and materials stated under this Agreement to a third
      party at terms more favorable than those offered to Party A.

6.3   Party B has the right to provide the same or similar service to a third
      party, on the condition that Party B continues to provide the same service
      and materials agreed upon under this Agreement.

1.    TERM

7.1   This Agreement shall come into effect once signed by the legal
      representatives or authorized representatives of both Parties and affixed
      with their official seals. This Agreement shall be effective till June 30,
      2007. If Party A wishes to renew this Agreement and notifies Party B with
      3 month's notice, this Agreement shall be renewed automatically for
      another 3 years on the same terms. There are no limits on the number of
      renewal.

2.    REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

      Each party represents, warrants and undertakes to the other party that:

      (1)   It is an independent legal person existing in accordance with the
            laws of PRC, and have the power and authority (including but not
            limited to any approval, consents or permission granted by the
            government departments to enter into and perform this Agreement);

      (2)   No provision in this Agreement violates the constitutive documents
            or the laws and regulations of China;

      (3)   It will use its best endeavors to take all necessary and procure
            appropriate or advantageous measures to perform this Agreement and
            to make this Agreement effective in accordance with the law and
            regulations of China and this Agreement.

3.    FORCE MAJEURE

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9.1   In the event of Force Majeure that causes both Parties or either Party to
      fail completely or partially in performing the obligations under this
      Agreement, that said Party is not liable for breach of agreement. However,
      in the event of such an incident, the affected party shall inform the
      other party by written notice within 15 days after the said incident and
      provide relevant proof and evidence to the other Party. At the same time,
      the affected party shall use its best endeavors to minimize the damage
      caused by the Force Majeure event. The affected Party or both Parties
      shall resume its obligations under this Agreement once the Force Majeure
      event has ended within a reasonable time.

9.2   Force Majeure in this Agreement means all objective situations that are
      unforeseeable, unavoidable and that cannot be overcome.

4.    CONFIDENTIALITY

10.1  Unless with written approval by the other party, neither party can
      announce nor supply or reveal to any third party any information regarding
      this Agreement or the business information of the other party, with the
      exception of requests by the legal or governmental departments or any
      other relevant securities regulatory authorities or for the purpose of the
      Listing Company seeking listing (and remain as one).

5.    TRANSFER OF RIGHTS AND OBLIGATIONS

11.1  Without the written approval of the other party, neither party may
      transfer any single right and obligation as agreed upon under this
      Agreement.

6.    NON-WAIVER

12.1  Unless otherwise specified by law, the failure or delay of exercising the
      right, power or privilege as endowed by this Agreement on the part of any
      Party cannot be deemed as the waiver of such rights, power or privileges.
      Besides, the partial exercise of such rights, power or privileges should
      not hinder the exercise of such rights, power or privileges of this Party
      in the future.

7.    NOTICE

13.1  All notices required to be delivered pursuant to this Agreement shall be
      in writing, and delivered to the address as stated at the beginning part
      of this Agreement, or to addresses or facsimile numbers designated by one
      Party to the other Parties in writing from time to time.this Agreement.

13.2  Any notice above shall be delivered either by hand, registered mail, or
      facsimile. Any notice shall be deemed to have been delivered at the time
      of actual receipt if delivered by hand; on the date of return receipt if
      delivered by registered mail; and at the time of transmission if delivered
      by facsimile.

8.    DISPUTE RESOLUTION

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14.1  In case of disputes as to the power, interpretation or implementation of
      this Agreement, both parties shall seek to settle the matters of dispute
      by friendly negotiation. If the matters of dispute cannot be settled by
      negotiation within thirty (30) days from the day the matters of dispute
      arise, either party has the right to resort to litigation at the people's
      court which has jurisdiction over where Party A situates.

9.    MISCELLANEOUS

15.1  Without written confirmation from both parties, no party can change or
      amend this Agreement. Upon the agreement of both parties, both parties can
      amend this Agreement or enter into supplementary agreement to this
      Agreement. The amendments or supplementary agreements of this Agreement
      shall come into effect once signed by the legal representatives or
      authorized representatives of both Parties and affixed with their official
      seals.

15.2  This Agreement is severable, that is, if any provision of this Agreement
      is held to be void, illegal, void or unenforceable at any time, the
      effectiveness and performance of other provisions of this Agreement shall
      not be affected.

15.3  This Agreement shall be governed and interpreted in accordance with the
      laws of PRC.

15.4  This Agreement is made into four (4) duplicate originals. Each party holds
      two (2) copies, and each copy shall have the same legal binding effect.

IN WITNESS WHEREOF, the legal representatives or authorized representatives of
      the both Parties hereto have executed this Agreement as of the date and
      venue first written above..

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Signature Page

      PARTY A: CHINA NETCOM (GROUP) COMPANY LIMITED (SEAL)

      By :______________
      Legal representative or Authorized representative_

      PARTY B: CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL)

      By :______________
      Legal representative or Authorized representative

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