Overview:

China’s telecom market grew from $289.6 billion in 2014 to $418.8 billion in 2018 at a compound annual growth rate (CAGR) of 9.7%. The market is expected to grow from $418.8 billion in 2018 to $649.3 billion in 2022 at a CAGR of 11.6% according to The Business Research Company (TBRC’s) Global Market Model.

[Switzerland is expected to be the fastest growing country within the telecom market at a CAGR of 16.5% followed by Denmark at 14.5% and Iraq at 13.2% respectively.]

China was the second largest country in the global telecom market.  It was worth $418.8 billion in 2018, accounting for 15.6% of the global telecom market, followed by Japan at 8.3% and India at 3 % respectively. China’s telecom market accounts for 42.5 % of the Asia Pacific’s telecom market in 2018.

Major telecom companies in China include: China Mobile, China  Telecom,  China Unicom,  China Netcom,   Companhia de Telecomunicações de Macau (Macau was previously a Portuguese colony now owned by China), and UTStarcom.

Editor’s Note: The first three companies listed (China Mobile, China  Telecom,  China Unicom) are all state owned and are by far the largest telecom companies in China.  We have no idea why neither Huawei or ZTE are listed as major telecom infrastructure companies like UTStarcom.

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Market Definition:

The telecoms market consists of sales of telecommunications goods and services by entities (organizations, sole traders and partnerships) that apply communication hardware equipment and software for the transmission and switching of voice, data, text and video. This market includes segments such as wired telecommunications carriers, wireless telecommunications carriers and communications hardware. The telecoms market also includes sales of goods such as GPS equipment, cellular telephones, switching equipment.

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Discussion:

The satellite and telecommunication resellers was the fastest growing segment within China’s  telecom  market at a CAGR of 14.6% followed by wired telecommunication carriers at 11.2% and wireless telecommunication carriers at 10.4% from 2014 to 2018. The satellite and telecommunication resellers is expected to be the fastest growing segment during the forecast period from 2018 to 2022 at a CAGR of 16.2% followed by wired telecommunication carriers at 12.8% and wireless telecommunication carriers at 11.9%.

The telecom market is segmented in to wireless telecommunication carriers, wired telecommunication carriers, communications hardware, and satellite and telecommunication resellers. The wireless telecommunication carriers market mainly consists of sub segments such as cellular/mobile telephone services, and wireless internet services. the wired telecommunication carriers market consists of sub segments such as broadband internet services, fixed telephony services, and direct-to-home(DTH) services. The communications hardware market includes sub segments such as general communication equipment, broadcast communications equipment, and telecom infrastructure equipment. The satellite and telecommunication resellers market has satellite telecommunications, telecommunication resellers, and others – satellite and telecommunication resellers as its sub segments.

China’s Telecom Accounts For More Than 3% Of The Country’s GDP in 2018:

The table below shows telecom market size as a proportion of China’s GDP during 2014 – 2022.

Year              2014  2015  2016  2017  2018  2019  2020  2021  2022  HCAGR FCAGR
Percentage of GDP 2.74% 2.96% 3.00% 3.04% 3.08% 3.13% 3.18% 3.23% 3.28% 2.98% 1.58%

China’s telecom market grew at a CAGR of 9.7% from 2014 to 2018, while China’s GDP grew at a CAGR of 6.49% during the same period. China’s telecom percentage share in China’s GDP increased from 2.74% to 3.08% during the same period. China’s telecom share of China’s GDP is expected to reach to 3.28% in 2022.

China’s Per Capita Expenditure On Telecom Was Less Than That Of Global Expenditure In 2018

The table below shows China’s per capita expenditure on telecom during 2014 – 2022.

Year                       2014   2015   2016   2017    2018   2019   2020    2021   2022   HCAGR FCAGR
Per capita Expenditure ($) 211.73 241.26 248.03 271.63  301.28 334.74 373.84  415.20 461.29 9.22% 11.24%

China’s telecom market grew at a CAGR of 9.7% from 2014 to 2018, while China’s population grew at a CAGR of 0.41% during the same period. China’s per capita expenditure on telecom increased from $211.73 to $301.28 from 2014 to 2018 and expected to reach to $461.29 in 2022.

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Major Trends Shaping The Telecom Market Include:

1.  Over-The-Top Services Are Becoming Popular

OTT services are becoming popular as this technology enables customers to access audio and video content through internet. Over-the-Top (OTT) services refers to accessing film or TV content via Internet without subscribing to cable or paytv services. It delivers messaging, voice and video content directly to the consumers over the internet.

2.  Investments In Cyber Security

Telecommunication providers are investing in cyber security solutions to protect telecom infrastructure and datafrom cyberattacks. Cybersecurity refers to the set of techniques used to protect the network integrity and data from unauthorized access. Telecom operators are investing more into cybersecurity solutions to manage cyber security. For Instance, leading telecommunication companies like Telefonica, Softbank, Etisalat and SingTel have signed an agreement to create the first global cyber security partnership

3.  Software Defined Wide Area Networking

Software defined wide area networking (SD-WAN) application is widely used in enterprise networking to reduce the network traffic. Software defined wide area networking (SD-WAN) is a specific application of software-defined networking (SDN) technology applied in WAN connections which connects enterprise networks over large distances. It improves connectivity and security in a cloud environment due to its scalability across numerous locations. It also provides encrypted data across the connectivity points, firewalls and application-based security.i For Instance, some of the major companies providing this technology include Silver Peak, Cisco, VMware, Riverbed and Citrix.

4.  Green Wireless Network

A rapid increase in energy consumption in wireless networks has been recognized as a major threat for environmental protection and sustainable development. Due to access to the high-speed internet provided by the next generation wireless networks and increased smartphone usage, the requirement for global access to data has risen sharply, triggering a dramatic expansion of network infrastructures and escalating energy demand. To meet these challenges green evolution has become an urgent priority for wireless network service providers.

5.  Voice over IP (VoIP) services:

VoIP is the transmission of voice and multimedia content over Internet Protocol (IP) networks. VoIP services are becoming popular as the audio quality is superior than traditional wired networks. With more networks investing to upgrade to 5G, there has been a substantial improvement in the quality of VoIP. 5G will eliminate common troubleshooting issues like call jitter, echoes and packet loss. AI is also beginning to be an integral part of system restoration. With the latest advancements in AI, identifying and adjusting poor quality calls even before answering them has become much easier. AI helps in restoring call quality quickly and efficiently without the need for human intervention.

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IDC on China’s Telecom Market:

In 2018, the capital expenditure of China’s three major operators (China Mobile, China  Telecom,  China Unicom) was US$4.34 billion and China was the second-largest operator expenditure market. In addition, in 2018, Chinese mobile subscribers reached 1.57 billion, which is the largest single mobile communication market in the world. On June 6, 2019, China formally issued 5G licenses, and the construction of 5G will accelerate.

With the business transformation and network transformation of operators, the impact of telecommunications industry on traditional infrastructure is also growing. SDN/NFV, cloud, and edge computing are becoming the new mainstream technology, and the operator market has great potential for IT vendors.

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The Business Research Company’s reports are based on the methodology below:

Our data sets are created using a wide range of proprietary and public sources including leading government bodies, associations, trade journals, market intelligence reports and trade magazines. Data is modeled based on hard data, extrapolation, regression analysis based on known macro data inputs, interpolation between hard figures, comparisons with other geographies and markets, price estimations, and qualitative inputs. Data is triangulated within our unique market data model covering an exhaustive list of 600+ markets across 48 countries and 7 regions. Comparable data is used for sanity check and trend analysis. For example, our global market value data is compared to unit sales and price data for the relevant market as well as relevant macro-economic data sets in order to establish validity.

Market value is defined as the revenues earned by organizations for products and services within the specified market. The break down by geography is revenue generated within the specific industry by organizations in the specified geography, irrespective of where they are produced.

Market value and forecasts used in market share calculation and potential gain of the company is sourced from TBRC’s Global Market Model (more below).

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The Global Market Model is a comprehensive database of integrated market information which covers historic, current and forecast market information. This database helps in drawing multiple conclusions, exploring market opportunities and taking effective business decisions.

Global Market Model’s methodology ensures that the data is of the highest quality. It starts with high standard data sources and correlation based modelling techniques. This is supported by TBRC’s market expertise and thousands of expert interviews conducted each year to verify the data.

The data sets on the global market model are created using a wide range of proprietary and public sources including leading government bodies, associations, trade journals, market intelligence reports and trade magazines. Data is modeled based on hard data, extrapolation, regression analysis based on known macro data inputs, interpolation between hard figures, comparisons with other geographies and markets, price estimations, and qualitative inputs. Data is triangulated within our unique market data model covering an exhaustive list of 600+ markets across 48 countries and 7 regions. Comparable data is used for sanity check and trend analysis. For example, our global market value data is compared to unit sales and price data for the relevant market as well as relevant macro-economic datasets in order to establish validity.

Analysis is drawn from our Consultants’ wide range of industry and research experience as well as public and proprietary sources. Consultants are trained in research techniques and ethics by the Market Research Society.

Every year The Business Research Company carries out thousands of interviews with senior executives and industry experts across hundreds of markets. Through these interviews we develop our internal understanding of markets and geographies and cross reference our understanding of global markets with expert feedback utilizing ‘Delphic’ research methodologies.

The Business Research Company prides itself on the quality and validity of its data and analysis. Our unique ‘end noted’ referencing approach allows the user to trace our market numbers and analysis back to the specific data sources they were derived from.

Note:  All currency conversions are done on the basis of 2018 exchange rates.

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References:

TBRC Business Research Pvt Ltd-Document BRCOMM0020200213eg2d0000f

https://en.wikipedia.org/wiki/Telecommunications_industry_in_China