Market report: 3G in China

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The 3G market in China has been growing steadily

3G or third generation mobile telecommunications is increasingly becoming the standard for mobile phones and global mobile telecommunication services. Services offered through 3G access include wide-area wireless voice telephone, mobile internet access, video calls and mobile TV, all in a mobile environment. On December 312008, the China State Council approved licenses for 3G mobile phone services in China. This marked the birth of third generation mobile communications in China.

China Mobile, China Telecom and China Unicom are the three major players in China’s telecommunication industry. According to statistics, in the first half of 2012, there were 17.51 million, 15.86 million and 14.67 million new subscribers for 3G service from China Unicom, China Mobile and China Telecom respectively. The total number of 3G subscribers in China reached 176 million by the end of this June, according to the Ministry of Industry and Information Technology.

China Mobile lags behind in 3G penetration

Today, there are roughly 1.12 billion mobile phone subscribers in China today. About 250 million of these mobile phone owners are 3G subscribers, comprising about 22% of total mobile phone subscribers in China. This number is expected to increase to about 33% of total phone owners by the end of the year. Although China Mobile has the highest number of mobile phone subscribers, it has the lowest penetration rate of 3G phones among its customers. A mere 13% of China Mobile’s customers are 3G subscribers, compared to the 33% and 44% for China Unicom and China Telecom respectively. If China Mobile hopes to take advantage of this rapidly growing and lucrative market, it must find a way to increase its penetration rate for 3G phones.

China Unicom takes new policies and hopes to realize profitability in 2012

As the smartphone market for phones priced between 1000 to 2000 RMB enters its maturity stage, China Unicom is actively making adjustments to its operating strategies to adapt to the market change. With the big increase in the sales of 1000 to 2000 RMB phones, the subsidy cost for 3G phones spent by China Unicom increased as well, which in some degree affected its profit. According to statistics published in 2011, the subsidy spent on 3G mobile phones by China Unicom reached 5.79 billion RMB and its net profit was 4.21 billion RMB. China Unicom sees 2012 as the key year for the realization of profitability in its 3G segment.

3G in China holds much potential

With the rise of the 3G era in China, the direction of companies in China’s telecom market must be adjusted. Soon, more telecommunication operaters may appear in the market, bringing with them more competition. However, what matters most to the Chinese people is more access to the rapidly developing technology and better services. With 3G technology, people are able to more freely embrace the world they live in and physical distances become shorter.

Daxue Consulting Market Report in China

Sources:

Picture Source: China Mobile

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