The USA is rapidly losing grip on its long-held title as the world’s mobile telephony leader, with China’s surging urbanites driving a smartphone revolution that is wrestling control of the world’s wireless telecom revenues. China is already the largest market for smartphones and by the end of 2014 will also overtake the USA in terms of total mobile revenues. This means that more apps, smartphone brands and m-commerce services will be tailored towards Chinese consumers, with US firms eager to enter the lucrative market. With apps increasingly the driving force in consumer-focused start-ups and innovations, corporate finance boutiques are paying more attention to the Asian market in the hope of finding lucrative investments. As a bridge between East and West, London corporate finance can also stand to benefit from China’s domineering mobile landscape.
sian brands drive Chinese mobile scene ahead while saturated US market stalls
China’s large population is gradually beginning to fulfil its mobile potential, as government programmes, rising incomes and greater affordability of both services and devices continue to drive revenues in the segment. According to trade sources, in 2014 Chinese mobile revenues will reach US$87.0 billion, outpacing the USA for the first time, who itself will see revenues of $60.0 billion.
This historic shift will occur due to several factors:
- Asia has seen an evolution of major regional smartphone brands (Lenovo, Huawei and Samsung), which are better placed to understand the feature and price demands of Chinese consumers. They are now actively expanding distribution channels in the country to serve growing adoption of smartphones;
- More Chinese consumers are arriving to cities from rural areas, which is both increasing earnings due to improved job opportunities and allowing access to better digital connectivity. Demand for and uptake of mobile services is therefore rising;
- With home possession of a mobile phone at near 100%, the USA is a saturated mobile market with little room remaining for growth. By contrast, only around a fifth of Chinese mobile subscribers were connected to the web in 2013, meaning growth opportunities in mobile added-value services such as data plans, m-commerce services, gaming and a variety of apps are much more vibrant.
While the USA gives up ground in the mobile marketplace, it remains the dominant digital force
China’s growth drivers also provide limitations to an improved wider information and communications technologies landscape, as the country’s low telecoms base creates weaker impacts in segments such as digital advertising and online media. By contrast, the USA is able to optimise its digital economy through its tech-savvy and well-connected Internet users.
Although China is quickly maturing, the US market is able to more successfully monetise digital services:
- The USA remains the world’s leader in digital marketing, as continuous innovations and maturity of the online advertising space enable greater expenditure by brands and businesses on targeting Internet and mobile users;
- US consumers have much greater access to digital services, with IPTV, high-speed broadband Internet and Video-on-Demand much more readily available. As a result, operators and providers are able to generate much greater revenues from the consumer market.
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