MWC Shanghai: 4G smartphones drive Chinese market; 3G hit

According to the latest report by GSMA Intelligence, smartphones are on track to account for two-thirds of mobile connections in China by the end of this year.

4G smartphones are the primary drivers of smartphone sales in the region. They are accelerating China’s migration from 3G to 4G networks.

With 4G uptake, 3G connections in the country have begun to decline. The study predicts there will not be any new non-4G models released by Chinese smartphone vendors after 2016, with many having taken this step already.

There were 632 million unique mobile subscribers in China in Q1 2015, accounting for 48 percent of the population.

Smartphones accounted for 805 million (62 per cent) of China’s 1.3 billion mobile connections in Q1 2015, a figure predicted to reach 913 million (68 per cent) by the end of the year.

However, growth in smartphone connections has slowed in recent quarters as the market matures, suggesting that the majority of current smartphone sales are now being driven by replacements rather than new connections.

The study ‘How 4G Devices in China Are Transforming the World’s Largest Mobile Market,’ is released ahead of the Mobile World Congress 2015 at Shanghai.

In China, there has been growing demand for both international and local brands.

“Almost half of the Chinese population now account for China’s 1.3 billion mobile connections and 62 per cent of these connections are smartphones,” said Hyunmi Yang, chief strategy officer at the GSMA.

Smartphone has been established as a lifestyle hub and digital platform for the Chinese, with the large-scale investments in 4G networks by Chinese mobile operators triggering a new era of growth.

Chinese-Mobile-Phone-User techwireasia
(source: techwireasia)

With the current momentum in the market, 4G connections in China will reach one billion by 2020, representing about two-thirds of the market by this point, up from 100 million (8 per cent) at the end of 2014. Local mobile operators are also driving the move to 4G by subsidizing the cost of an increasingly wide range of 4G devices via their retail channels.

Average price of a smartphone in China is CNY1,100 (US$175). The average price of a smartphone from a domestic Chinese vendor is CNY935 (US$150), almost half the price of a smartphone from an international brand at CNY1,765 (US$285).

However, the study finds that major Chinese vendors such as Xiaomi and Huawei are increasingly releasing new models that target mid-to high-end market segments.

Chinese vendors are also producing a greater proportion of 4G smartphones than their international rivals. In Q1 2015, 70 per cent of new handset models released by Chinese vendors supported 4G, compared to the global average of 40 per cent. The average price difference between a Chinese-manufactured 4G smartphone and its 3G equivalent is CNY375 (US$60).

“Chinese smartphone vendors such as Xiaomi, Huawei and Lenovo are benefiting from a rich local smartphone manufacturing and design ecosystem, which is allowing them to compete effectively with foreign smartphone brands such as Apple and Samsung,” added Yang.

“There remains a large market for producing budget smartphones that enable people to connect to the mobile internet for the first time, while the increasing number of affluent customers in China is also fuelling a growing luxury smartphone market,” Yang added.

Rajani Baburajan

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