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China eyes growth in comms segment

Posted: 15 Apr 2009 ?? ?Print Version ?Bookmark and Share

Keywords:China? market communications? trends China?

CCID Consulting has analyzed the development trends of China's communications market in 2009. Here are the highlights of the research firm's findings.

The telecommunications market is experiencing a growth in number of users. In 2008, China's telecom operations market revenue reached 813.99 billion Yuan, up 11.8 percent year-on-year. Affected by the worldwide economic crisis, the growth rate of China's urban residents? disposable income in 2009 will slow down, but China residents? telecom spending accounts for a relatively fixed proportion of their income. Thus, generally speaking, China�s telecom services? business will experience rapid growth.

Figure 1: China's Telecom Services' Income and Growth, 2004-2008. Source: CCID Consulting (Click to view full image)

Mobile communications users' growth is the major impetus of China's telecom operation market. Having a 48.5 sets/100 persons rate, China�s mobile communications users will have a stable development.

In 2008, the size of China�s communications equipment market reached 295.29 billion Yuan, up 12.1 percent year-on-year. This growth can be attributed to three factors: the nationwide GSM and CDMA networks? upgrade and expansion; 10 cities? TD-SCDMA technical application trial network�s plan and deployment; and mobile VAS market�s strong growth.

3G equipment market
China�s W-CDMA, CDMA2000 and TD-SCDMA have different progress in 3G networks? construction in 2008. China Mobile has launched the second stage of TD-SCDMA network construction; China Telecom has begun CDMA network biddings, which face 81 key cities; China Unicom has set up W-CDMA trial networks in seven cities. In all network constructions, China�s local vendors use 3G opportunities to rapidly improve competitiveness, which accounts for large market share of the total 3G network construction.

In the field of TD-SCDMA, ZTE has the largest market share, accounting for 36 percent of the total market. In W-CDMA, Huawei has been putting pressure on Ericsson, which has the largest market share. In CDMA, ZTE has the largest market share.

In 2008, the unified communications market was prosperous. One of the important factors is that many manufacturers paid more attention to the realization of technical development and applications. Considering users? practical demands and objective application environment, they launched unified communications products, which were close to customer demands.

Large enterprises' network constructions were nearly complete. Hence, they had their focus on network applications.

Figure 2: Size and growth of China�s communications equipment market, 2006-2008. Source: CCID Consulting (Click to view full image)

As the PC, IC, mobile communications and software progress, the convergence trend becomes more obvious. Mobile communications terminal convergence manifests in two aspects. The first one is services convergencethe convergence of mobile TV, mobile media and mobile advertisements. The second is the convergence of productsthe integrated terminal products has taken shape, representing IT, consumer electronics and communications.

Because of 3G, consumers enjoy diverse services. In addition to the choices provided by mobile operators, the mobile terminal can also perform different tasks such as taking photographs, camera shooting, recording, playing movie clips, editing files. These functions once belonged to home appliances and computers.

The government issued 3G licenses to providers in January 2009, officially marking its beginning. In 2008, TD-SCDMA large-scale commercial use faced social testing. As for 3G, users? feedback will become an important basis of follow-up development. China Mobile has high requirements for customized manufacturers? technology R&D, products? capability and testing, and in-depth customization capabilities.

China�s mobile phone manufacturers? support and input on TD-SCDMA had initial results: Their cooperation with operators and their accurate grasp of technology trends helped them win the bids. In 2008, China Mobile promoted TD-SCDMA testing and trial for commercial use. Now, China�s 3G terminal market has begun. As China's own IP rights of 3G technology, China�s domestic manufacturers such as ZTE and Datang have an advantage in this field. China�s domestic mobile phone manufacturers have accounted for over 84 percent of the total sales of 344,000 TD-SCDMA mobile phones;189,000 data cards are from China�s domestic manufacturers. ZTE�s TD-SCDMA terminal sales volume has accounted for 38 percent, which leads in market share.

New opportunities
China�s mobile communications value-added services (VAS) are also experiencing rapid development. Today, China has hundreds of service types, including trading, information, database and entertainment. Currently, major income-based businesses include SMS, WAP, CR, MMS etc., whose trend is on the lane of rapid growth.

China�s VAS market has entered a mature period. The VAS market has been contributing to the growth of the overall communications market. China�s operators have started 3G since 2008. The TD-SCDMA network has also entered commercialization after a three-year trial. Commercial 3G network will bring new opportunities to the VAS market. The 3G network will improve user experiences to VAS greatly, especially to high-bandwidth services.

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