China’s wireless penetration rate is predicted to increase over the next four years, rising from the current rate of 25% to over 40% by 2009, according to eMarketer’s new China Wireless report.
In a relatively short time, China has become a leading wireless market, with significant opportunities for further growth.
However, with considerable cultural, administrative and economic hurdles to overcome, China presents companies with a difficult operating environment, leading eMarketer to predict that, despite the recent spectacular increase in wireless penetration, the rate of growth will slow.
This is attributed to China’s vast population of low-revenue subscribers, with economists believing that it will take some time before income rises to what could be considered “middle-class levels”.
The “two Chinas” model, wealthy urban versus. underdeveloped rural” is a challenge to both government controlled carriers and public or private service providers or any foreign companies looking to gain access to China’s excess of 330 million wireless subscribers.
Noah Elkin, eMarketer senior analysts and author of the report explained: “China’s subscriber growth figures are undeniably impressive, but it is worth putting that growth in context.”
He continued: “China’s wireless users tend to spend very little per month. Developing countries with large pre-paid user populations generally tend to produce low ARPU, and in this regard, China is no exception.”
However, wireless usage in China fits no exact model. “Because PC penetration rates are lower than those for wireless phones, Chinese consumers do not necessarily have the wired internet as a reference point,” says Elkin. “So the wireless application protocol (WAP) market is flourishing in China, unlike more developed economies with advanced wireless users population.”
Recent research from Informa Telecoms & Media, predicts the Chinese mobile market to grow by 65% by the end of 2010 and shows the market to have surpassed the 400 million subscriber mark in March 2005 (see Global Mobile Subscriptions To Hit 2.14 Billion By End Of 2005).
The 3G market in China is also forecast to enjoy strong growth. Market intelligence firm, IDC, predicts 3G penetration in the Asia-Pacific region to rise by over 130% over the next four years, with China forecast to account for almost 70% of the increase, increasing from zero to almost 98 million (see Asia-Pacific 3G Penetration To Hit Over 140 Million By 2009).
Research published last year by In-Stat estimated subscribers of worldwide mobile phones would hit 2.5 billion by 2009 (see Growth Returns To Mobile Phone Market). Services such as wideband code-division access, one of the main technologies for the implementation of 3G cellular systems, are predicted to experience robust expansion by 2008.
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