SMARTPHONES TO ACCOUNT FOR TWO-IRDS OF CHINESE MOBILE MARKET BY YEAR END, ACCORDING TO NEW GSMA INTELLIGENCE STUDY

Smartphones Driving China's Move to 4G Networks

Shanghai: Smartphones are on track to account for two-thirds of mobile connections in China by the end of this year, according to a new study published today by GSMA Intelligence, the research arm of the GSMA. The new 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) had reached 62 per cent by the end of Q1 2015, above the average level in Europe (55 per cent).

The rapid adoption of smartphones across urban areas in China has been fuelled by the increasing popularity of both international device brands, such as Apple's iPhone, and devices produced by a growing number of domestic smartphone vendors. 4G models are now the primary driver of smartphone sales, which is accelerating China's migration from 3G to 4G networks.

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. Our study published today 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.

Smartphones Transforming China's 4G Market

According to GSMA Intelligence, there were 672 million unique mobile subscribers1 in China in Q1 2015, accounting for 48 per cent 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.

3G connections in the country have begun to decline as 3G smartphones are replaced with 4G models. 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. It is forecast 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. Local mobile operators are also driving the move to 4G by subsidising the cost of an increasingly wide range of 4G devices via their retail channels.

The Rise of the Chinese Smartphone Vendors

According to the study, the 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 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.

The new report How 4G Devices in China Are Transforming the World's Largest Mobile Market' is available to GSMA Intelligence subscribers and to accredited members of the press on request.

-ENDS-

Translation:

Simplified Chinese

About the GSMA

The GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 250 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and Internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces industry-leading events such as Mobile World Congress, Mobile World Congress Shanghai and the Mobile 360 Series conferences.

For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA.

Media Contacts

Brenda Bu (Beijing)

+8610 8569 9928

bbu@webershandwick.com

Vivienne Wu (Beijing)

+8610 8569 2395

vwu3@webershandwick.com

Ava Lau (Hong Kong)

+852 2533 9928

alau@webershandwick.com

GSMA Press Office

pressoffice@gsma.com

1 Unique mobile subscribers (individuals) can account for multiple mobile connections

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