Mobile habits made in China

The most recent estimates of mobile phone penetration in China suggest that there are now in excess of 780 million handsets in use, including an increase of 30 million new phones in the last quarter alone. You might think that a mobile community larger than the total population of the US and Japan combined would also make it one of the most advanced markets in the world – but you would be wrong.

The major operators in China, led by the all-powerful China Mobile, are heavily subsidising the cost of handsets for hundreds of millions of subscribers. The current growth market in the country is the less wealthy rural customer (commonly in the lower tier cities, mostly non coastal), bringing down average margins. 3G and broadband penetration is growing but only very slowly, new revenue streams for operators are proving hard to establish, and smart phone adoption is growing, but still very immature as most smart phones are still rather expensive by local China standard (average costs for a smart phone is over RMB 4,000 / GBP £400, roughly the equivalent of an average monthly income level even in urban cities).

Data intensive applications are not popular because data tariffs are prohibitively high for most subscribers. Chinese consumers are very practical, especially when it comes to value-for-money, so they favour desktop PCs for browsing and entertainment every time. For now, mobile phones are still primarily used for making phone calls and sending / receiving SMS messages, while mobile browsing is limited to the less data intensive applications such as GPS, maps, web chat (QQ chat engine is commonly used in China) and reading simple news articles. Needless to say, these applications are not the advanced mobile entertainment we’re witnessing in other regions (e.g. streaming internet TV / movies, uploading / downloading music, and so on).

This doesn’t mean the Chinese mobile market will not explode one day when tariffs become more equitable and smart phones become cheaper, but the forecast remains uncertain. In order to encourage consumers to use their phones for complex tasks, such as social media, the form factor needs to become more friendly. Right now most users are struggling with nine-key input which is cumbersome and not very rewarding.

Although some professional users are beginning to get to grips with Nokia smart phones, typing on these devices is still not considered particularly user-friendly. Hanyu Pinyin, or more commonly just Pinyin, is currently the most popular way of ‘Romanising’ standard Mandarin, by which users type phonetic in English into their phones and Chinese character predictively appears. Clever, and some consumers can use Pinyin very quickly, but still not ideal for anything text intensive, such as mobile blogging, for example.

The bottom line is that technology and usability must evolve concurrently to catch the imaginations and meet the budgets of the vast Chinese market. China may not tweet but it certainly blogs. It may not have Facebook or YouTube, but it does have Xiaonei, kaixin, and YouKu among others. What is needed to start a technological revolution that will bring urban and rural populations closer together through improved communications and enhanced mobile social media, is truly affordable flat rate data tariffs, better screens, more user-friendly character input applications and devices, and mobile operators willing to continue taking a hit in short-term subsidies in return for limitless long-term gains.

This article was written as part of our May newsletter