Smartphone, 3G Demand to Support GrowthWhile the era of double-digit growth rates in the world's largest economy may be over, we expect the economy to still grow at a 7%-8% clip. Even the country's Five-Year Plan for 2011 to 2015 had called for an annual long-term GDP growth of 7%. At this rate, millions of Chinese will still enter the middle-class strata every year. Greater disposable income will see demand for 3G-capable smartphones increase in the coming years. China is already poised to overtake the U.S. this year to become the world's largest smartphone market by volume, according to IDC's latest market figures. (See
However, the behemoth hasn't yet been able to capitalize on its huge 2G subscriber base as well as it should have. As of January, China Mobile only had around 54 million 3G subscribers compared to China Unicom's 43 million and China Telecom's 39 million.A big reason for this has been its homegrown TD-SCDMA 3G network, which is incompatible with most smartphones currently available in the market such as the iPhone. This requires handset vendors to come out with specially crafted phones for the carrier's proprietary network, which has proved to be a huge deterrent.