Insight into China’s 300m mobile internet users

Research firm Nielsen has released a fascinating set of statistics on China’s mobile landscape as part of public available highlights from its most recent analysis on the country and its mobile phone market.

The statistics are a great follow-up to a recent post on China’s 786 million subscriber strong mobile market, and provide interesting background to recent developments in the nation’s market including $50bn in funds raised for ‘Chinese YouTube’ Tudou, the launch of Wi-Fi enabled iPhones in the country and Apple’s move into the $4bn-rated Chinese gaming market.

Before looking at the findings, it is worth noting the research method employed:

Nielsen’s Mobile Insights Report on China is based on face-to-face surveys with 4,946 consumers age 15 and up in 19 cities around China.  The interviews were conducted in March 2010

Nielsen’s research concludes that a staggering 54 percent of mobile subscribers make use of advanced data services – including internet, gaming, music, etc.

While internet alone is used by 38 percent of the country’s mobile subscribers. Rough calculations based on this figure put China’s mobile internet userbase at around 300 million. To give some context mobile internet usage in the USA is 27 percent while Thailand fellow-Asian state Thailand is, by my estimations, between 20 and 25 percent.

It is no surprise to see prepaid tariffs dominating the market while mobile ownership is spread fairly evenly across age groups, though China’s ageing population may account for this spread which is not indicative of usage or ARPU data.

More interesting statistics of typical mobile usage is within the chart below.

On the business, brands and marketing side of things Nielsen reports:

With the consolidation of the telecom market in China over the past year, three carriers now dominate the market. China Mobile is the clear leader with more than 70% market share, followed by China Unicom and China Telecom.

In terms of handset brands, Nokia dominates followed by Samsung and Motorola.

However, the real story is that the top international brands are losing share to local brands that have designed low cost phones with features that appeal to Chinese consumers, such as extra loud volume settings, funky shapes and designs and extra long battery life. 

This trend has been accentuated by the government’s requirement that leading operator China Mobile deploy a 3G technology (TD-SCDMA) that is not used in other markets- forcing global device brands to make difficult choices about whether to develop devices for this new standard.

While price was the most important factor for consumers when considering buying a new device, we see increasing interest in device style and device features as well as considerable brand loyalty.

The government move to TD-SCDMA is responsible for no confirmed launch for the Apple iPhone 4, and a host of other devices that are coming to terms with China’s alternative mobile technology.

The average break down of user spend is within the chart below.

SMS remains dominant with gaming (both preinstalled 39% and downloaded 11%) a service tipped to grow hugely.

Mobile internet is, as mentioned, a large chunk of usage reflecting the belief that, across Asia, mobile will become the primary platform for mass market internet usage.

The report has more on mobile internet usage:

For many people in China, the mobile Web is the only one they need. When they think of the Web, they don’t think of tethering themselves to a desktop PC and the accessories of mice, keyboards, mouse pads, printers and monitors. Not only do many homes in China not have (or need) landlines for voice communications, but also they don’t require hardwired Internet access for their fix of the Web. With mobile phones, everything they need is in the palm of their hand.

On a related note, Nielsen has comment on market opportunities with mobile internet usage predicted to become more widespread:

While almost 40% of Chinese phone users access the mobile Internet, they don’t use as many data intensive applications such as mobile video and content uploads.  There are a number of reasons for this: 3G launched just last year; penetration of smartphones such as the iPhone and Android is still low; the Mobile Application ecosystem remains fragmented, and social networking platforms are less developed. 

However, as mobile penetration is just crossing 50%, China’s fixed phone line connections are decreasing as more users “cut the cord” and access to the Internet via computers is less prevalent than in the U.S. The demand for mobile devices and data will continue to expand, leading to many opportunities for service providers, device manufacturers, retailers and content providers.

China’s growth over the last decade has been extraordinary and shows few signs of abating any time soon.  As such, it’s only natural that Chinese consumers would wholeheartedly adopt technology and products that enable them to be productive – and stay connected – on the move.

The report is an interesting look at China reflecting many of the prevalent trends and predictions analyst have made for the Asian region as a whole, bar the more established industries in Japan and South Korea.

– Mobile internet usage high and predicted to grow further

– Prepaid remains dominant

– SMS saturated with basic valued added services – ringtones, installed games, music, etc – growing

– Fixed line telecom and internet low/falling in the shadow of mobile

– 3G services emerging as key revenue generator for operators

– Smartphone gaining in popularity

– Design and price important factors for new phone purchases

The rest of Asia, particularly in the south-eastern region, is developing in similar ways but with at a considerably slower pace to that of China were the government continue to invest and coax growth in its mobile industry. Unlike other markets in the continent however, internet sites and services are less accessible and open to monetisation. Strong, established domestic competition and Chinese government policy make the growth of mobile internet in China far more challenging to tap into than anywhere else. But given its size already, and undoubted potential to grow, the likes of Facebook, Google, Twitter and other western internet brands will pursue China nonetheless.