China to top mobile phone markets

China will become the world's largest mobile phone market by revenue for the first time by year end, overtaking the United States, an industry report said. Internet guru Mary Meeker has identified the country as the most mobile nation in the world.

Phone sales will reach US$87 billion (S$109 billion) in China during 2014, a jump of 53 per cent year-on-year. That compares with US$60 billion projected sales in the US, Strategy Analytics said.

Smartphones dominate sales. Chinese shoppers will buy more than 400 million smartphones this year, according to local research company Analysys International. The amount is on track to break 500 million by 2016, it said.

Meeker acknowledged China's role in the global mobile Internet sector. The world's second-largest economy is moving swiftly to become a leader in mobile commerce, helped with applications installed on smartphones, according to Meeker. She is a partner at venture capital firm Kleiner Perkins Caufield & Byers.

As of last year, more than 500 million Chinese were using mobile devices - primarily smartphones - to connect to the Internet, according to the China Internet Network Information Center. The penetration rate of mobile Internet users rose to a record 81 per cent in 2013.

China beat the US in terms of smartphone shipments in 2012.

The growth in mobile devices is driven by the country's rapid shift to fourth-generation telecommunications technologies, analysts said.

Leading players, such as Samsung Electronics Co, Huawei Technologies Co Ltd and Lenovo Group Ltd, have pledged to expand their distribution channels, and a widening product offering is diversifying demand in China.

Although China leads the global mobile phone market in many ways, the Strategy Analytics report said the US is most likely to remain the most valuable market by profit for a while.

"High average selling prices and huge operator subsidies will make the US a very profitable market for major device brands such as Apple and Samsung," it said.

The world's leading smartphone brands may find it difficult to maintain a high growth rate in China, where analysts said the high double-digit expansion may be nearing its end. Additionally, local players are vigorously expanding businesses on their home turf.

Lenovo, better known for its PC business outside China, is betting on smartphones for future profit. The Beijing-based company became the second-largest smartphone vendor in China by the end of the first quarter, data from Analysys International showed. Its 12.3 per cent market share only lags behind Samsung.

Coolpad - Yulong Computer Telecommunication Scientific (Shenzhen) Co Ltd - as well as Huawei and Xiaomi Corp enjoyed near double-digit market share and Apple's share dropped to less than 7 per cent.

Bryan Wang, China head at consultancy Forrester Research Inc, said 4G is a necessary feature for companies such as Xiaomi to put into their portfolio as Chinese are eager for faster Internet speeds.