Last updated: 7 Jul 2010 Update History
Report Status: Archived
Report Pages: 209
Analyst: Paul Budde
Publication Overview
The China market still has low penetration rates and this is an excellent indicator for future growth. The report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and IPTV developments. Subjects include:
Researcher:- Lisa Hulme-Jones
Current publication date:- July 2010 (16th Edition)
Next publication date:- May 2011
Executive Summary
China is committed to keep the economy growing in the midst of the global financial crisis. The State Council initiated a massive infrastructure spending program as part of an active fiscal stimulus plan aimed at boosting the country’s slowing economy. Targeting GDP growth of around 6%, China attained actual growth levels of 8.7% and was one of the first country’s to lead the global economy out of a recession. This was driven by massive infrastructure developments and the propensity of the current generation to spend on ‘necessities’ that were seen as luxuries not so long ago. In addition, China is actively expanding its political and economic ties with major emerging markets, such as Latin America, Africa and the Middle East. According to the International Monetary Fund, China’s share of worldwide GDP is to grow from 1.7% in 1991 to an expected 11.1% in 2014. This highlights the massive change underway in China. Telecommunications is an important vehicle to drive through this radical shift in economic prosperity and culture.
China’s entire telecommunications market will generate around US$130 billion in 2010, making it the second largest telecoms services market in Asia Pacific after Japan. The market is expected to increase at a compound annual growth rate of 8.8% between 2009 and 2014, reaching US$187 billion by 2014, surpassing Japan as the largest telecommunications services market in Asia.
In the past five years, as one of the country’s ‘pillar industry’, China’s telecom service industry has grown at a faster rate than the Country’s GDP. According to official statistics from the Ministry of Industry and Information Technology (MIIT), telecommunications business contributed approximately 4.3% of the country’s GDP in 2009.
The industry restructure was finalised in 2008 resulting in a more level playing field and the market was seeing significant competition between the newly formed full-services operators. Due to the continued massive take-up of mobile services, the total number of telephone subscribers broke through the one billion subscriber mark in 2009 and the number of mobile subscribers alone was on track to reach 800 million by mid 2010. Use of the Internet in China has also grown at a phenomenal pace reaching 400 million users into 2010 after already passing the US in 2008 to become the world leader. Another noticeable element is that of users accessing the internet via mobile phones.
The newly formed China Mobile, China Telecom and China Unicom competed fiercely in 2009 in establishing the companies as full-service operators. The mobile sector was still expanding at over 15% per annum going into 2010, with the roll-out of 3G services well underway. Entering 2010, with far more handsets on the market and pricing coming down to more realistic levels, the take-up of 3G was accelerating, but was still far below the level required to meet the MIIT target of 150 million subscribers by 2011. In fact, with numbers still short of 20 million by end Q1 2010, the prospects of reaching 100 million by end 2011 were looking decidedly optimistic. However, with such aggressive government support and the world watching, particularly the TD-SCDMA roll-outs, it is certain that the three operators will be scrambling to meet this stretch target.
China’s spiralling online population has turned the Internet into a forum for citizens to express their opinions in a way rarely seen in a country where the traditional media is under strict government control. The internet has had a subtle unifying effect on China. The diversity of Chinese dialects, often an obstacle to comprehension of the spoken word, does not limit written comprehension.
However, Internet development and application in China is imbalanced regionally, and between urban and rural areas. In 2009 China Mobile continued to pursue the rural market development strategy. The company took advantage of State policies to reduce development costs for the rural market and took a first-mover advantage in rural markets. While urbanisation progresses in rural areas, this market presents significant potential and as such the rural market continues to be a key growth driver.
The three full-service operators are expected to compete aggressively in 2010 and into 2011. Value-added services will continue to grow as revenue from traditional voice services continues to decline. The convergence across telecommunications, internet, and radio and TV broadcasting networks will form a new market beyond the traditional telecommunications industry. The huge popularity of the internet will continue to pervade all aspects of society as China strives to establish its innovation credentials.
China – Internet, broadband, IP telephony and telecoms statistics – 2004; 2009, 2010
Sector |
Year |
||
Internet |
2004 |
2009 |
2010 (e) |
Internet users (million) |
94.0 |
384.0 |
480 |
Annual growth |
18.2% |
28.9% |
36.1% |
Internet subscribers (million) |
71.7 |
111.9 |
121 |
Number of Chinese websites (million) |
0.67 |
3.2 |
3.3 |
Broadband subscribers (million) |
|||
DSL |
16.9 |
83.9 |
100 |
Total |
25.8 |
103.6 |
125 |
Subscribers to telecoms services (million) |
|||
Fixed-line telephone subscribers |
311.7 |
313.7 |
290 |
Penetration |
24.0% |
23.6% |
21.7% |
Mobile phones |
317.2 |
747.3 |
860 |
Penetration |
24.4% |
56.3% |
64.2% |
(Source: BuddeComm based on MIIT, ITU and CNNIC data)
For those needing high level strategic analysis and objective analysis on China, this report is essential reading and gives further information on:
Data in this report is the latest available at the time of preparation and may not be for the current year.
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