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Why China Mobile Still Dominates China

NEW YORK (TheStreet) -- China is looking to lead from the front in the mobile telecoms market, and is trying hard to position China Mobile  (CHL) as the leading mobile telecommunications network in Asia.

While the West and Europe have been enjoying 4G Internet services for quite some time, China is only now starting to awaken from its slumber. The government is pushing hard to develop high-speed Internet facilities for mobile users.

As one might expect, the construction of telecom towers in the world's second-largest economy dwarfs the total number of 4G towers in all of Europe. This is impressive given that the number of mobile devices in use in China now numbers close to 1 billion.

Android Dominates the Low End

A report recently released by Umeng (an analytics company in China) tabulated some interesting statistics on Chinese smartphone and tablet usage.

For one, some 35% of tablets and smartphones purchased in China cost less than $149 while 22% of sales for smartphones and tablets cost between $150 and $329, and 16% of smartphones and tablets sold ranged in price between $330 and $499.

Secondly, the vast majority of smartphone and tablet sales are with Android devices. With 57% market share for devices under $330, Android is a massive market player. Brand segmentation is rife in the Android market, with Samsung Electronics leading the Chinese Android market with 24% of market share. The other 4 local companies dominating the Chinese market include the following operators include HTC Corp, Xiaomi, Huawei and Lenovo Group  (LNVGY).

The Umeng report reveals that the remaining 27% of mobile smartphones and tablets purchased in China are priced over $500. It is this category that Apple dominates - to the tune of 80% of total sales. Viewed in perspective, Apple (AAPL) has a total market share in China of 7% - lower than Android by a long margin, but significantly greater than expectations.

China Mobile - a government run corporation - is responsible for all mobile telecommunications in the country. With the introduction of 4G technology, Apple will derive immeasurable benefits from the Chinese market. China's unprecedented economic growth is heavily dependent on its technological prowess; this will certainly be bolstered with high-speed Internet.

The sheer size and depth of the Chinese market will provide a well of untapped potential to top-tier companies like Apple. The adoption of TD-LTE technology will once again allow China to lead from the front - this time in ultrahigh speed Internet.

The stigma that Chinese smartphones and technology is inferior to Western technology still prevails, but China will have an opportunity to reverse this by forging ahead with its new drive towards large-scale, ultrafast Internet technology.

The recent downturn in the Chinese economy may well have put a damper on the price of global copper, but the insatiable appetite for technological prowess within the country remains as strong as ever. In fact the government has even earmarked a figure of $600 million towards the development of 5G technology for 2016. This technology is purportedly 100 times faster than what is presently available with 4G technology.

That may well be a harbinger of what's to come for global telecommunications enterprises like Apple Inc. and Android.

Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Chatz is a contributor at Intertrader.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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