By the end of Q2 2015, the penetration rate of smartphones has reached 65.5% in China urban regions, an increase of 4.3% compared with the previous quarter and an increase of 18.9% year over year. The penetration rate of China Mobile smartphone users was the highest which reached 66.3% according to Kantar Worldpanel ComTech.

Although the ratio of China Mobile users was 1.1 percentage points lower year on year, it still accounted for 60.2% market share, more than the total number of users of the other two telcom networks combined.

Users who chose not to use China Mobile any more were mainly the female, post-00s and post-90s, 3G network users, post-paid subscribers in third-tier and fourth-tier cities. More than half of the lost users joined the network of China Unicom, mainly due to the recommendation of their friends and relatives. New users who chose to use China Mobile were mainly because of the mobile 4G network, while many users complained about the cost-effectiveness and the imparity clauses.

In contrast, the number of China Telecom mobile phone users continued to grow, which reached 15.3%. Home broadband, landline telephone and other services helped China Telecom in the growth. In addition, there were a considerable number of users who chose China Telecom mobile phones for its favorable price.

In order to avoid the loss of more users, China Mobile should encourage users to upgrade to the 4G network.

Also read: China’s Top 30 Mobile Internet Companies in 2015

The growth of 4G users in China outpaced 3G users in 2014 with 97.284 million new subscribers comparing to 83.644 million 3G new subscribers according to Ministry of Industry and Information Technology of China.

China’s mobile internet data usage was 2.062G in 2014, an increase of 62.9%. A 4G subscriber on average used 205M data per month, an increase of 47.1%.

China mobile users sent much less number of SMS in 2014, 763.05 billion, down 14.4%. MMS growth was down 24.4% in 2014 while it grew by 23% in the previous year.

China phone users increased by 39.426 million to 1.536 billion, an increase of 2.6%. Mobile phone subscribers increased by 56.98 million to 1.286 billion with a penetration rate of 94.5%. The landline subscribers reached 249 million, down by 17.555 subscribers.

Also read: Half of China Internet Users to Use Tablet in 2015

GfK China estimates that China 4G mobile phones retail sales volume is expected to exceed 100 million in 2014.

In first half of 2014, retail sales volume of LTE smartphones was 13 million; and in Q2, the volume was 10 million in China smartphone market according to data from GfK. In 3G times, smartphone industry chain has been completed and with rise of 4G, telecom operators and many mobile chip manufacturers increase investment in 4G market. The speed of 4G replacing 3G will be much faster than 3G replacing 2G.

In June 2014, China’s domestic mobile phone brands accounted for 72% in mobile phone market.

Domestic brands priced less than RMB2,000 ($326.45) strengthened cooperation with telecom operators and online e-commerce platforms to promote custom-made phones, reaching over 80% market share. Domestic brands priced over RMB2,000 continuously make efforts on innovation, branding and cooperation with different channels. Huawei, Oppo and Vivo have already made success in middle and high-end smartphone market.

GfK China believed that 2014 is an important year for shifting from 3G era to 4G era in China. China’s domestic smartphone brands have moved overseas. In H1 2014, online sales volume of mobile phones via e-commerce platforms exceeded 38 million with an increase of 91% YoY, accounting for 17% of total mobile phone retail volume in China. Online smartphone sales develop rapidly which has impact on offline mobile phone shops.

Also read: Samsung and Xiaomi Ahead of Apple, Leading China Smartphone Market

The Ministry of Industry and Information Technology (MIIT) of China recently published a report on the Chinese telecom industry in January 2014. The statistics showed that the total users of mobile internet services reached 838 million in January 2014, accounting for 67.8% of all mobile phone users. Mobile internet traffic also saw a remarkable YoY increase of 46.9% in January, amounting to 133 million G in total and 165.1 M per capita, of which 80.8% was generated from mobile phone connection.

According to the MIIT report, the net increase of telephone users nationwide was 4.976 million, bringing the total number up to 1.501 billion. Fixed broadband internet users also increased by 2.264 million, a biggest net increase in the past 9 months which brought the total number to 191 million.

Driven by 3G technologies, the number of mobile phone users increased by 6.157 million in January, making it 1.235 billion in total nationwide. 3G mobile phone users increased by 17.627 million to 419 million, setting a new record of net monthly increase and in the mean time, bringing the percentage of 3G users among all mobile phone users up by 2.3 percentage point to 33.9%. Among the 419 million 3G users, 49% used TD, an increase of 1.4 percentage point from the end of last year.

By contrast, the user base of 2G mobile internet shrank to 528 million in the same month. As 2G users upgraded to 3G internet, the percentage of 2G users among all mobile internet users decreased to 42.8% from 44.8% at the end of last year.

China Mobile sufferred from total market failure in TD network era, now it’s time for China Mobile to win 4G era.

China telecom enterprises’ main task was increasing 4G network coverage spots, besides, 4G supported mobile phones was also very crucial. China Mobile took cooperation with manufacturers seriously. Tang Jian, general manager of China Mobile, revealed to Tencent technology news that there were 10 4G smartphone devices selling. By the end of 2013, there would be more than 30 4G smartphone devices in the market from many manufacturers, including Samsung, Sony, HTC, etc.

Mobile Manufacturers All Enthusiastic About 4G

Compared with China Unicom and China Telecom, China Mobile had the strongest desire in 4G market. The main reason was that China Mobile hoped to change the disadvantage position in 3G market. Except for internet connecting speed, China Mobile 3G TD network supported mobile phones were not attractive in design, as well as limited mobile devices. Now the situation in 4G market was completely different, not only these main mobile manufacturers all attended China Mobile’s 4G meeting, but also all expressed their support in making 4G smartphone devices. China Mobile used to ask manufacturers to make 3G TD supportive devices for them.

HTC higher management class pointed it out to Tencent Technology news that all their product lines were included in 4G smartphone devices. Sony will also integrate music, video and game into 4G devices to meet the needs of 4G consumers.

Why were mobile manufacturers all enthusiastic about 4G? Word said that China Mobile planed to procure 50 million 4G devices in 2014, during which mobile devices accounted for 40 million. The large procurement would let any mobile manufacturer heartbeat increase, moreover, though 4G network coverage still needs improvement, it fast internet connection will win the hearts of consumers and mobile manufacturers would not waste opportunities like this.

China Mobile also learned from its mistake in 3G market, it began contacting with foreign mobile manufacturers before 4G license issuance. For example, in August 2013, China Mobile collaborated with Samsung to launch the first TD-LTE mobile phone Galaxy Note 2. It is said that on December 18, Samsung will launch many TD-LTE mobile phones, including Galaxy S4, Note 3 and CS03.

At present, consumers could purchase many 4G China Mobile smartphones in China, including Samsung 7108D (Note 2 4G supportive), Sony M35t, ZTE U9815, Huawei D2-6070, Coolpad 8736, Hisense X6T, K-Touch 1. By the first half of 2014, there will be over 50 4G China Mobile smartphone devices.

Changing to 4G network requires consumers to change to USIM card. China Mobile announced that they would offer free USIM card change service to consumers. If one has a 4G supportive smartphone device, he or she will only need to change to USIM card in China Mobile stores without changing phone number. And consumers could also get a 4G smartphone by joining advance payment plan.

Cheap 4G Smartphone Devices

China Mobile is going to launch 1,000 yuan (USD 164) 4G smartphones together with many manufacturers, which will be the new hit in 2014. Tang Jian believed that China Mobile 4G devices would have a good sales performance in 2014. It estimated that 4G devices below 1,000 yuan (USD 164) would become the dominance in the second half of 2014.

By July 2013, China 3G users reached 340 million, during which China Mobile had 147 million 3G users. China Mobile led for the cheap 4G smartphone devices, which means the popularity of 4G will come very soon.

NPD’s newest Smartphone Quarterly report released on November 25 2013 estimated the smartphone sales would be 1.8 billion in 2017, 82% of total mobile phones. In Q3 2013, smartphone penetration rate was 55%, and the compound annual growth rate in the next five years would reach 21% while non-smartphone would decrease at an annual rate of 16%.

A large part of the growth of smartphone in the next five years will come from Asia-Pacific area, especially China. Smartphone sales was expected to increase 63% in 2013, and China would occupy 30% global smartphone market in 2017. NPD DisplaySearch analyst Tina Teng said that international smartphone brands and entrance-level smartphone drove the growth of smartphone in new markets. As the price of smartphone dropped, more and more smartphone fresh users would change their mobile to a higher-class smartphone.

The most popular screen size in 2017 might be between 4 to 4.9 inches, but smartphone with over 5 inches screen would occupy 38% market share by volume. Smartphone with HD screen was estimated to own 43% market in 2017. And quad-HD screen smartphone will be launched in 2014, it might occupy 16% market in 2017.

4G smartphone would continue to occupy more market share with global internet speeding up, it would own 41% of smartphone sales in 2017. 3G would still own 51% of smartphone market by volume in 2017.

By the end of July 2013, the number of mobile internet users in China reached 820 million, during which 3G users hit 334 million.

3G mobile users increased 100.94 million in 2013, equals to the total increased users in 2012. In total, 3G users reached 334 million, 28.2% of total mobile users.

Currently fixed broadband internet subscribers in China was 183 million. Fibre optic broadband users reached 31.6 million, 17.3% of total broadband users. Mobile internet users reached 820 million, with 69.2% penetration rate.