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China mobile market enters a development period led by the demand for mobile upgrades from the second half of 2003, in 2007, over 60% of users changed their mobiles with over 90 million mobiles sold for this purpose. The reasons could be attributed to faster function upgrades, higher performance- price ratio, shorter product life cycle, and customized service by SP.

The number of new subscribers reached a new record in recent years with over 86 million new subscribers in 2007 and over 7 million per month. According to statistics, new subscribers mainly come from rural markets and 3rd/4th-level cities. Joint efforts by SP and manufacturers further release the demand in these areas. There were 547 million mobile subscribers in China in 2007, and the large subscriber number, differentiated demand from segmentations and the demand for mobile upgrade exchanges for 3G in the following years will all push mobile market development on a large scale.

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Mobile has fulfilled the popularity of color screens, cameras and music functions over several years, and the development of integrated 3C technology keeps on giving mobiles new functions such as MP4, TV, blue tooth, GPS and WIFI, which boosts the function evolution, though some renovations may fail to be popularized. The hardware function expansion is rather limited at the moment so that the function expansion will mainly happen in application and services.

The iPhone launched by Apple in 2007 has resulted in a craze, which shows that Internet function integration will be a major method to expand mobile functions. The best proof is that leading brand Motorola has sounded the call to “put Internet into your pocket and make the world wireless.” Meanwhile, outline and industrial design are the other solutions for technical renovation, the sliding phone from Samsung and super slim mobile by Motorola have both led to some trends and made mobiles in vogue.

In the future, mobile will fulfill wireless information and entertainment needs, which will demand a faster technology renovation than any other consumer electronics, and it is the direct driving force behind boosting mobile market development on a large scale.

The competition of products on the market will be rather fierce while the China mobile market is developing on a large scale. The homogeneity, price wars, and sinking channels will direct consumer behavior, and manufacturers will turn from seizing market share to chasing profit. The certificate of mobile authority and the launch of the China 3G mobile market will stimulate market competition and create concentrated market share in already-advantaged brands and less market share in small brands. It will also create competitive cooperation among manufacturers and distributors.

China’s mobile phone sales will be lower than expected after the May earthquake and a lack of state of the art applications depressed sales in the second quarter, a Beijing-based research firm said recently.

CCID Consulting, a research group with the Chinese Ministry of Information Industry, cut its 2008 domestic handset sales forecast to 165 million units from 185 million units.

“The handset market lacks innovations and the 3G market has only just started so many consumers have adopted a wait-and-see attitude,” said Li Xuefang, a CCID analyst.

Popular new functions include electronic wallets which allow users to pay utility bills, Pushmail which connects directly with e-mail, GPS and NFC (near-field communication) which can be used for ticketing and payments, the CCID said.

“These functions require advanced chips and smartphone operating systems. An extra like mobile TV is just for a niche market,” said Sandy Shen, a Shanghai-based analyst at Gartner Inc.

China has issued details of the anticipated reorganization of the telecommunications industry which will involve 3G licenses, probably next year.

High-speed mobile services, which can include film downloads and videoconferencing, should encourage more users to replace their phones. Firms such as Nokia, Motorola and Dopod have developed 3G phones and are just waiting for regulator approval.

In the first half of the year, 96.40 million handsets were sold, a 17.52-percent growth year on year. But second quarter sales lagged behind the first quarter because of the earthquake, CCID said.

Cellphone Advertising
credits: Ajax the Pirate

Simple SMS-based services might lose their appeal in China soon, since cell phones equipped with applications such as web browser, global positioning system and multimedia function are getting popular among Chinese consumers

A survey released recently by the CCID Consulting showed that 31,668 people had been interviewed and 37 percent of them would like to choose cell phones with which they can surf online when they intended to buy a new one, while 33 percent hoped they could get one with the GPS function, a helpful tool to China’s increasing car owners.

More than 20 percent, mainly the young generation who put pieces of music in their cell phones and use it as a music player, said they would like one having a large storage disk.

A similar proportion said they would use their new mobile phone to chat with online friends.

CCID Vice President Lu Guoying estimated that Chinese mobile phone market will see booming purchase from 2008 to 2010, when many Chinese consumers change their cell phones for new ones. “It is an opportunity for mobile phone companies to raise their market share,” said Lu.

China is expected to manufacture 500 million sets of mobile phones in 2007, with 150 million to be sold in domestic market.