April 14, 2019

China Is Set to Become One of the World's Leading 5G Markets with 460 Million 5G Connections Forecast by 2025, Says a New GSMA Report

China's mobile ecosystem added RMB5.2 trillion ($750 billion) in value to the country's economy last year, according to a GSMA report, equivalent to 5.5 percent of China's gross domestic product (GDP) in 2018. The GDP contribution comprises mobile operators (1.0%); related industries (1.1%); indirect contribution (0.7%); and productivity improvements (2.7%).

Authored by GSMA Intelligence, the research arm of UK-based GSMA, the report explains that "China is a huge mobile market, nearly four times the size of North America, with 1.2 billion unique subscribers at the end of 2018. Over 97% of these come from mainland China, with the remainder spread across three other markets – Hong Kong, Macao and Taiwan." The Mobile Economy China 2019, available both in English and Chinese, reveals that:
  • China is the largest mobile market in the world, home to almost 1.2 billion unique mobile subscribers at the end of 2018, representing 82 percent of the country's population (a unique mobile subscriber represents an individual that can account for multiple SIM connections;
  • More than two-thirds (69 percent) of mobile connections in China are smartphones, with smartphone adoption expected to reach 88 percent of connections by 2025 (there were 1.5 billion SIM connections in China in 2018 ((excluding licensed cellular IoT), forecast to rise to 1.7 billion by 2025);
  • 77 percent of China’s connections are currently running on 4G networks – 4G adoption will peak in the coming years before falling as consumers migrate to next-generation mobile services;
  • China is set to become one of the world's leading 5G markets with 460 million 5G connections forecast by 2025, which would account for 28 percent of China's total connections by this point;
  • The RMB5.2 trillion ($750 billion) economic contribution by China's mobile ecosystem in 2018 is forecast to grow to RMB6 trillion ($870 billion) by 2023;
  • China's mobile ecosystem directly and indirectly supported 8.5 million jobs in 2018 and made a tax contribution to the public finances of government of RMB583 billion ($84 billion); and
  • The number of licensed cellular IoT connections in China stood at 672 million at the end of 2018, supporting various industrial and smart cities applications.
The report's executive summary presents the following two points:

Mobile underpins rapid transition to a digital society

"China is the world's second largest economy," the report says, "accounting for close to a fifth of global gross domestic product (GDP). Through a combination of government policies and market forces, the economy has expanded massively since the late 1970s, with industries such as steel, automotive and telecoms developing rapidly. Today, China's broad and diverse mobile ecosystem underpins its digitization strategy and is having a profound impact on consumers, businesses and wider society."

In my experiences of working in the Middle Kingdom for the past several years, I can attest that "China's growing middle class are purchasing more goods online, amplifying the country's already huge e-commerce market and reducing the prevalence of cash transactions. China is home to many millions of tech-savvy consumers who are keen adopters of social media and users of a variety of apps, placing greater demands on operators for improved network performance."

The report further notes that "[d]espite trailing many developed markets in launching 4G, Chinese operators have invested heavily in their networks, recognizing the positive correlation between user experience and data consumed. This has resulted in improved mobile data speeds, while subscribers in China have migrated to 4G services at a faster pace than those in Australia and the US, creating a mass market and economies of scale in a short timeframe. Operators are now working to bring 5G to market and are set to lead much of the world in this space. China will host the 2022 Winter Olympic and Paralympic Games, which will serve as further motivation to accelerate 5G deployments."

Government and policymakers enable a platform for digital progression and pioneers

According to the report, "In a testing geopolitical climate, the government remains steadfast in pushing forward the country's digitization journey, considering traditional sectors such as retail and health as ripe for disruption. The state is also investing in a range of emerging technology industries such as AI, leading to a surge in external financing. Meanwhile, internet tech players and mobile operators alike are at the cutting edge of innovation, often partnering to develop and apply pioneering solutions, which can improve efficiency and realize cost savings, as well as expose new revenue streams.

"In parallel, Chinese policymakers have taken important steps to modernize the country's regulatory framework for telecoms, establishing a platform for further digital progression. Though further reforms should be considered, many technological advancements are on the horizon and more industries will adopt and commercialize digital solutions. Operators appear resolved to provide the superior connectivity required to power China in the 5G era, supporting the country's transition to a leading digital society and its presence on the international stage."

Infographic: GSMA Intelligence

Done carefully, companies worldwide will find China to be a lucrative market in artificial intelligence, cloud computing, connected devices, digital health, fintech, mobile applications and other digital services. What are your plans to capitalize on this opportunity?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

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