LIVE FROM GSMA MOBILE WORLD CONGRESS SHANGHAI 2015: China is making waves in the mobile industry. Not only will smartphones account for two-thirds of mobile connections in the country by the end of 2015, it is also the world’s largest M2M market with 74 million connections, according to two reports revealed by the GSMA ahead of Mobile World Congress Shanghai.
The first study, ‘How 4G Devices in China Are Transforming the World’s Largest Mobile Market’, finds that smartphone adoption in the country (as a percentage of connections) reached 62 per cent by the end of Q1 2015, above the average level in Europe, fuelled by the increasing popularity of both international device brands and domestic vendors.
“Our study reveals a vibrant domestic device market that has established the smartphone as a lifestyle hub and digital platform for millions of Chinese citizens – with large-scale investments in 4G networks by Chinese mobile operators triggering a new era of growth,” said Hyunmi Yang, chief strategy officer at the GSMA.
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 report predicts that 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, thanks to operators and vendors.
Local mobile operators are driving the move by subsidising the cost of an increasingly wide range of 4G devices via their retail channels.
The report notes that 4G models are the primary driver of smartphone sales, which is accelerating China’s migration from 3G to 4G networks, and predicts there will not be any new non-4G models released by Chinese smartphone vendors after 2016.
The report also observed that Chinese vendors are producing a greater proportion of 4G smartphones than their international rivals.
“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,” said Hyunmi 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.”
Meanwhile, another report titled “How China Is Scaling the IoT” explains that a strong economy, far-sighted government investment and international cross-sector partnerships has helped the country become the global leader in the deployment of the Internet of Things (IoT).
The government has not only allocated funding to IoT as part of its five-year development plan but has also selected 202 cities, including Beijing, Guangzhou, Hangzhou and Shanghai, to pilot smart city projects.
According to Alex Sinclair, chief technology officer at GSMA, “connectivity is boosting major industries such as logistics, manufacturing and energy in terms of increased efficiency, but it has also created a new consumer market in areas such as connected vehicles, home appliances and wearables, putting China at the forefront of IoT deployment.”
The report described China’s wearables market as “a hotbed of innovation” with thousands of products available at accessible prices, adding that the connected car market is also growing, “driven by the increasing availability of 4G, which is providing a range of in-car services such as entertainment, navigation, safety and vehicle diagnostics”.