Four massive landmarks underscore the importance – as though we didn’t know – of China as the world’s top mobile market. First, China now has more than 1 billion mobile subscribers (India isn’t far behind) – that’s more than three times the US. Second, China now has more than 150 million 3G users. These are the sum of subscriber stats from the three main Chinese operators. Third, China has more than 400 million mobile Internet users (i.e. more than there are mobile subscribers in the US), according to Analysys International. Fourth, China is now the largest smartphone market in the world with 22 percent (overtaking the US at 16 percent), according to Canalys.
As of March 2012 the combined total subscribers of the top three Chinese mobile operators – China Mobile, China Unicom, China Telecom – is now 1,012.5 million, according to mobiThinking’s arithmetic.
Let’s put this in perspective:
• There are three times the number of mobile subscribers in China as in the US (331.6 million, according to CTIA, November 2011).
• China accounts for more than one sixth of the world’s mobile subscribers – there were 5,981 million (i.e. just under 6 billion) mobile subscribers worldwide at the end of 2011 according to estimates by the International Telecommunication Union (ITU).
• China Mobile, the largest operator on the planet, has 667.2 million subscribers, that’s more than 1.5 times the number of mobile subscribers in the whole of Africa – 433 million at the end of 2011 according to estimates by the ITU.
• India isn’t far off breaking the one billion mobile subscribers barrier either. At the end of February 2011, there were 911.2 million subscribers according to TRAI.
Mobile subscribers in China by operator March 2012
Sources: China Mobile; China Unicom; China Telecom
As of March 2012, the combined 3G subscribers of the top three Chinese mobile operators is now 152.1 million, according to mobiThinking’s arithmetic.
Putting this in context:
• 3G subscribers are the number of mobile users that have mobile broadband (3G stands for third-generation telecoms) as part of their mobile package. You don’t need a 3G network, 3G phone or 3G subscription or to access the mobile Web, but it will make the experience better and cheaper. Thus mobile Web usage can be considerably higher (as we will see in the next section) than the number of 3G subscribers. Nor does 3G handset mean smartphone – lots of feature phones support 3G and can access the mobile Web perfectly well and speedily.
• Currently 15 percent of Chinese mobile subscriptions are 3G. This is slightly behind the global average of 20 percent, considerably behind developed nations at 48 percent (these figures are calculated from ITU stats. But it isn’t going to stay that way for long. The pace of growth is staggering. The last time we did this research in November 2011, there were 118 million 3G users, now there are 150 million: that’s an increase of 34 million people in four months… now that is progress.
There were 431 million mobile Internet users in China at the end of Q4, 2011 according to estimates by Analysys International, a Beijing-based research consultancy.
• If Analysys is correct, then there are more mobile Web users in China than the population of the US or Europe. Mobile Internet users are growing strongly, up 8.6 percent on the previous quarter – at that rate, we could see half a billion Chinese mobile Web users this year.
• Analysys estimates that revenue from mobile Web was 25.18 billion Yuan (US $3.99 billion) in Q4 2011 and total revenue for 2011 was 86.22 billion Yuan (US $13.7 billion). The annual revenue breaks down to traffic charges 41.8 percent; mobile shopping 12.5 percent; mobile advertising 3.5 percent; and mobile applications and services 42.2 percent (it is not entirely clear what this latter category incorporates).
In Q1 2012, China represented 22 percent of global smartphone shipments, while the US (formerly the largest market) accounted for 16 percent, according to estimates by Canalys.
• Knowing that China now has three times as many mobile subscribers as the US, this shouldn’t really surprise anyone. It was always a matter of when, rather than if, this would occur. (In fact, rival analyst group Strategy Analytics suggests China actually overtook the US in smartphone shipments back in Q3, 2011).
• Canalys notes that the number of smartphones sold in China doubled in Q4, where sales in the US rose by just 5 percent – you have to ask: does this indicate that the US smartphone market is stagnating?
So how many smartphones are actually sold in China?
• Canalys tells us that global smartphone shipments were 146 million units (IDC agrees), so 22 percent means 32 million smartphones will have sold in China in Q4. That’s plenty to get handset manufacturers excited, but at 3.2 percent of Chinese mobile subscribers (the percentage of US subscribers buying smartphones is 7 percent), you’d guess it’s going to be multiple quarters before smartphone penetration becomes really significant in China.
• The interesting thing is that regardless of smartphone penetration, there are already 431 million mobile Internet users in China, which drums home the point that you don’t need a smartphone to access the Web.
And what smartphones are Chinese people buying?
• Quarterly sales figures should come with a health warning, as they are a poor indication of market penetration. However the current state of play, according to Canalys, is: Samsung, Apple, Nokia (mirroring what’s happening globally), but local manufacturers ZTE, Huawei and Lenovo are “hot on the heels of the top three”. With Samsung, ZTE, Huawei, Lenovo and more all basing their smartphones on Android – the Google-backed operating system now accounts for two-thirds of the Chinese smartphone market.
• To get the historical perspective of Chinese smartphone market, see research from Analysys International which charts the decline of Nokia’s Symbian and the rise of Android through 2011.
And what about feature phones?
• What Canalys or Analysys don’t tell us is the all-important ratio between smartphone v feature phone sales in China, but considering that globally 36.4 percent of mobile handset sales are smartphones and 63.6 percent are feature phones (source: IDC, Q4, 2012), you’d expect that majority of people in the world’s top mobile market will actually be buying feature phones rather than smartphones for the foreseeable future.
• Here are the top handset vendors (feature phones and smartphones in China in Q1/Q4 2011), according to Analysys International). Note Samsung overtaking Nokia (mirroring global trends) and the rapid rise in market share of the local heroes Huawei, ZTE and Lenovo.
Sales Share of Top 10 Mobile Phone in China in 2011
Source: Analysys International
So what is your strategy for the world’s biggest and most important mobile market? Will you take a gamble and focus on native mobile apps for this or that niche smartphone platform or will you go mobile Web – already the platform of choice for 431 million Chinese mobile users (rapidly heading for half a billion, in mobiThinking’s humble opinion)?
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