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4G triggers mobile growth in China

News, 14 July 2015

SHANGHAI: China's rapid transition to 4G devices is helping to boost a slowing smartphone market, with local manufacturers moving upmarket to challenge international brands.

A new study from GSMA Intelligence, the research arm of the GSMA, reported that smartphone adoption in the country (as a percentage of connections) had reached 62% by the end of the first quarter of 2015 and was on track to hit 68% by the end of the year.

Hyunmi Yang, chief strategy officer at the GSMA, described the smartphone as "a lifestyle hub and digital platform for millions of Chinese citizens" and added that large-scale investments in 4G networks by Chinese mobile operators were "triggering a new era of growth".

At the end of last year there were 100m 4G connections, representing 8% of the market, but the study forecast one billion connections by 2020, by when they will account for around two thirds of the market.

Local mobile operators are driving the move to 4G by subsidising the cost of an increasingly wide range of 4G devices via their retail channels. And after 2016 all new handsets released by domestic manufacturers are likely to be 4G models.

Already 70% of new handset models released by Chinese vendors support 4G, compared to the global average of 40%.

According to the GSMA study, major Chinese vendors such as Xiaomi and Huawei are increasingly releasing new models that target mid-to high-end market segments, and are competing effectively with global brands like Apple and Samsung.

But, added Yang, "There remains a large market for producing budget smartphones that enable people to connect to the mobile internet for the first time."

Across the wider Asia-Pacific region, the GSMA reported that there were 1.6bn unique mobile subscribers representing 45% of the population, although major markets such as India, Pakistan and Bangladesh remain relatively under-penetrated.

It estimated that the mobile industry contributed US$1.1 trillion to the Asia Pacific economy in 2014, equivalent to 4.7% of the region's GDP, with over a quarter of this economic contribution generated directly by mobile operators.

Data sourced from GSMA; additional content by Warc staff