This report profiles China’s telecommunications industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including China Mobile Ltd., China Unicom (Hong Kong) Ltd., and China Telecom Corporation Ltd.

In 2013, business revenue of the Chinese telecommunication industry increased by 8.7% y-o-y. China has the world’s largest base of landline subscribers; however structural changes within the industry and rapid mobile phone adoption have caused a decline in landline voice services. In 2013, the number of landline telephone users continued to drop in both urban and rural areas. On the other hand, the number of Internet users in urban areas grew 8.0% y-o-y whereas that of rural areas surged 13.5% y-o-y.

The number of Chinese Internet users reached 618mn in 2013, spending on average 25.0 hours each week to access the Internet. Penetration rates were high in well-developed provinces but high growth rates were achieved in less-developed provinces. Provinces such as Jiangxi, Yunnan, Guizhou, Henan, Anhui, Tibet, among others, experienced higher growth due to lower penetration rates. Almost two-thirds of broadband users had internet access speed of 4Mbps and higher.

Meanwhile, smartphone sales gained momentum in smaller cities. The number of mobile internet users surged by 19.1% y-o-y in 2013. As of end-2013, there were 1.23bn mobile users in China, representing a penetration rate of about 90%. Out of the 1.23bn mobile subscribers in China, nearly one-third were 3G subscribers. China is prepared to launch a new round of fiscal support for the Internet of Things (IOT) industry through a special fund for technical innovation and tax incentives.

Key Points:

• Mobile Internet users have increasingly become the dominant users of Internet in China, representing 81.0% of total Internet users by the end of 2013

• Entry-level smartphones will drive sales and penetration in rural China

• Industry output value of Internet of Things (IOT) is expected to exceed RMB1tn by 2020