China Mobile's Marketing Strategy: Assessing its Effectiveness and Making Tentative Recommendation

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Chapter 1.0


1.1 Background

"WHICH is the biggest mobile-phone market in the world? The answer, since July, is China's. A country in which, until a few years ago, the only people who could afford mobile phones were triad mobsters now has 121m users. BDA, a Beijing consultancy, forecasts that the number will rise to 370m by 2005, enough to persuade many investors--even after telecoms shares have dived all round the world--that China was, and would remain, a magic market." (A billion voices calling? Mobile phones in China, 2001, p1)

'The magic market' of China has been a recent event, yet the seeds of this market were sown in 1976 after the death of Chairman Mao. China initiated a series of economic reforms at this time, and the telecommunications industry was seen as vital to economic growth (Harwit, 1998, pp4-6).

However, it was not until the 1990s that the pace of reform was quickened when China's telecommunications market changed drastically (Harwit, 1998, p1).

A key part of this change was to split up the monopoly China Telecom into four state-owned companies, which are China Telecom, China Netcom, China Mobile and China Unicom with relatively distinct but to some degree overlapping markets (Pangestu and Mrongowius, 2002, pp5-7).

China Mobile rapidly became the largest mobile phone operator in China. In 2001, its asset was more than $32.74 billion and it had 100 million subscribers. Until 2002, these figures have grown to over $38.8 billion and more than 138 million subscribers (China Mobile Company Profile, 2004, p1). However, the continued good performance of China Mobile is threatened by a number of factors.

These threats come from a number of places, the most important of these being the fierce competition with the three other state-owned companies. However, this competition will be increased in...