China’s Mobile Handset Market Booms

According to ABI Research entitled “Chinese Smartphone OEMs and ODMs,” 2010 marked a year of outstanding growth for China’s handset market: unit shipments saw a 17 percent increase from 2009, with smartphone shipments accounting for 11 percent of the total.

“The smartphone growth trend is expected to continue at least through the next five years,” said ABI Research VP of forecasting Jake Saunders, in a statement. “Entry-level smartphones retailing between US $155 and US $200 will be the driving force for this growth and for the attendant subscription rate growth among Chinese handset operators. This market surge is also reshaping the handset manufacturing and distribution business model in China.”

China has successfully achieved the first phase of its 3G technology deployment, completing 3G network construction in most major provinces and cities. The total number of 3G subscribers in the country climbed to 47 million in 2010.

Chinese mobile operators have been involved in the development of smartphones in China: operators first develop their own smartphone platforms, then purchase handset models from handset OEMs through a centralized procurement process, whereby OEMs design customized handsets according to operators’ specifications. The local mobile operators are also in tune with consumers’ preferences, providing low-cost service plans with low data volumes, to pair with entry-level smartphones.

China’s domestic handset OEMs such as ZTE, TCL, Huawei, and Lenovo have aggressively invested in their smartphone businesses in recent years with the aim of riding the wave of 3G deployment in the country.

Kevin Burden, ABI VP and practice director for mobile devices, adds: “Compared to their international counterparts, the local OEMs showed their strengths in low-cost manufacturing knowhow and good relationships with local and international handset operators, as well as unique user interfaces and applications; all these factors promoted a growing presence for them in the entry-level smartphone market not only in China, but also in the global market.”