Mobile market report: China

October 14, 2009

By Michael Garwood

In the first of a series of international market reports, Mobile News dissects the Chinese market: a prepay nation of 700m subscribers and 60pc penetration

Unsurprisingly China, the most populated country on the planet with almost one and half billion people, has the largest base of mobile subscribers in the world, with more than 700 million since mobile first hit its market in 1994.

But perhaps what is surprising is that mobile penetration measures at just under 60 per cent, meaning mobile is still very much a growing industry, compared with the UK market, which is more than 114 per cent saturated.

Ovum regulation analyst Charice Wang says: “China is still a developing country so mobile penetration is still quite low across the whole country at below 60 per cent. In rural areas this is around just 20 per cent. So there are still very big areas for growth.”

Because of its sheer size, lack of coverage in China is a significant issue, although 3G coverage is expanding rapidly.

Contrary to the belief China is technologically advanced like its neighbour Hong Kong, it is in fact, in many ways lagging behind Western markets.

Hong Kong is being excluded from this piece as it operates independently from the rest of China, and uses different network operators, and unlike China, is an established market.

IHS Global Insight deputy research manager Jing Li explained: “Hong Kong is a completely separate market. The players are different as is the regulation. Mobile penetration is well above 100 per cent and there are many more operators, primarily private operators.”

In contrast China does not yet have technologies such as mobile TV and video calling, which are popular in other Asian markets such as Hong Kong, Japan and Korea.

However, recent figures from Chinese operators suggest the market has begun to mature, with the level of growth in customer numbers and ARPU slowing down, as it has done in the UK.

There are many reasons for this. The economy being one, as many foreign migrants to Chinese coastal areas have returned home due to unemployment.

Additionally, the market demographics are skewed largely towards prepay, which lowers the overall ARPU levels.

Full article only In Mobile News issue 449 (October 5, 2009).