3G Phone Market to Grow in China Due to Subsidies

A recently published report from iSuppli Corp shows that the Chinese market of 3G-capable mobile phones is expected to see an impressive boost during the ongoing year due to aggressive subsidies from wireless carriers. According to the research firm, the shipments of such devices should increase by a factor of six in 2010, with domestic shipments of 3G handsets expected to reach 42.97 million units this year, up from the 7.2 million registered in 2009.

“Chinese carriers plan to provide more than RMB50 billion, or $7.3 billion, worth of subsidies to promote the domestic 3G handset market in 2010,” said Kevin Wang, director of China research at iSuppli. “Because of particularly strong subsidies, phones using the Time Division Synchronous Code Division Multiple Access (TD-SCDMA) air standard that is backed by the Chinese government will generate the bulk of growth in 2010. Domestic shipments of TD-SCDMA phones will rise to 20.4 million units in 2010, up from 1.3 million in 2009.”

The price tags of 3G handsets should seem much more appealing to mobile phone users courtesy of subsidies from wireless operators, and the result should be increased sales even if the TD-SCDMA air standard lacks value-added data services, iSuppli notes. China Mobile, the largest carrier in the country, is expected to increase the subsidies it offers to consumers from RMB12 billion in 2009 to up to RMB30 billion in 2010.

At the same time, iSuppli also notes that the following five years are expected to register growth in China’s mobile subscribers, courtesy of voice service fee reductions and lower selling prices for mobile phones. At the end of 2009, China had a mobile subscriber base of 727 million, and the figure is expected to reach 1.1 billion by the end of 2014, according to the research firm. Moreover, the number of 3G subscribers in the country is expected to reach 230 million people in 2014. iSuppli also notes that, during the last year, shipments of mobile phones in the country topped 240 million units, and that they should grow by 11 percent in 2010, reaching 266 million units.

Additional details on iSuppli's report can be found on the research firm's website here.