China’s buoyant middle-class coupled with the availability of low-end, one-thousand Yuan smartphones, could see China’s addressable market reach 80% of its households.
China’s strong economic expansion, but slow population growth saw GDP per capita grow on average 9.2% between 1990 and 2010, growth which caused significant increases in disposable income. China has a buoyant middle class, which lags behind USA households in terms of absolute disposable income, but whose eagerness to consume has made China the world’s third largest consumer market behind Japan and USA.
Smartphone App Market Monitor, Vol.6.
China has long been the world’s largest mobile market. Q1 2012 saw China become the first country in the world to count one billion mobile subscribers, marking China’s overtaking of the USA in terms of total smartphone shipments making it the world’s largest smartphone market.
China’s middle-class share of total population (2007 – 2012), Source: IMF and World Bank data; research2guidance estimates, 2012.
China: Largest mobile market globally
Traditionally, China’s smartphone market has been dominated by mid to low-end smartphones, which sell for around 2,000 Yuan. But, most Chinese users own a mobile phone that is priced at significantly less than 2,000 Yuan. China’s population high propensity to consume, but comparatively lower affordability, has made the market for low-price smartphones huge in China.
research2guidance estimates that by 2017, 80% of China’s population will belong to a middle-class household. We consider middle-class to be households earning an annual income between US$8,500 to US$60,000 and that usually spend a third of income on discretionary spending.
80% of China’s population will be middle-class by 2017
Continuous increases in household purchasing power and a surge in 1,000 Yuan handsets by major local players like Huawei Technologies Co. and ZTE Corp and foreign players like Samsung and Nokia, will result in China’s one billion mobile phone users being able to afford smartphones.
What is your take on the Chinese market?