China’s mobile boom will attract major investments

China has become a global leader in almost every mobile indicator and the market offers a huge audience for mobile products. Success on the Chinese market could propel a start-up into unicorn status. Digital majors are likely to be turning to business transfer agents more and more to find the next successful mobile business in the country and acquire it before it becomes too expensive.

China has gradually conquered the mobile space, step by step. The country’s huge population and constantly growing demand for mobile communications has driven a growth across all mobile indicators.

Right from the early 2000s, China was the world mobile subscriptions leader. In 2011, China overtook the USA to become the global leader in smartphone sales by units. And In 2014, the Asian superpower became the global leader in total mobile Internet subscriptions with 380 million, overtaking the US market in the process.

The next major mobile milestone will arrive this year and will complete the full cycle of China’s mobile dominance. In 2015, China will overtake the USA to become the world’s largest mobile Internet retailing market, reaching a market value of around $70 billion.

China has long been a lucrative market for mobile operators, in particular for Internet data packages and add-on services like mobile payments. Local majors such as China Mobile and Alibaba’s payments company Alipay have developed strong incentives for consumers to use the mobile as a shopping device. However, China becoming a global leader in mobile retail comes as a calling card to many of the world’s top Internet retailers.

Last year, venture-capital investments in China’s tech sector more than doubled to $6 billion from $2.8 billion in 2013, according to Hong Kong-based AVCJ Research, with both foreign and domestic funds putting in more money than the prior year. Total early-stage funding for Chinese tech start-ups surged to nearly $2 billion last year from $313 million in 2012 as deals increased to 299 from 172, according to AVCJ.

The government is also set to provide a major boost to mobile start-ups. The central government announced a $6.5 billion start-up fund early this year. In a news briefing in March, a vice science and technology minister said that by the end of 2014 there were more than 1,600 tech incubators in China, with 80,000-plus start-up projects employing 1.75 million people. The government approved the establishment of 115 high-tech parks nationwide, with more than half a million companies registered.

Companies in segments such as mobile games, apps and cross-border e-commerce are likely to prioritise a Chinese presence in the next few years, especially as the mobile retail gap between China and the USA continues to widen. After all, only around a third of Chinese mobile subscribers have access to the web, so the market still has a long way to go before reaching maturity.

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