IRG Telecom, Media, and Technology Weekly China Market Review

JCN Newswires, Feb 12, 2009

Hong Kong, Feb 12, 2009 - (ACN Newswire) - The following is an excerpt from IRG's TMT Weekly Market Review Feb 1 - 8. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT) sectors.

Software

- The China Ministry of Industry and IT announced that China's software industry reported a 29-percent revenue growth for 2008 from one year earlier. Software technology services were the biggest driving factor, up 40 percent from 2007. And software products followed with a 17 percent rise. Output from industry leading state-owned and privately-owned high-tech companies, with annual sales revenues of more than 5 million yuan (US$0.73 million), was up 14 percent from the previous year. And production of high-end products such as laptops and LCD TV's also rose by more than 20 percent. The software industry generated 580 billion yuan (US$84.9 million) of revenue in 2007, up 21 percent year-on-year.

Internet

- Ctrip.com International, Ltd. (US:CTRP) plans to release an online platform at the end of February to sell accident insurance policies. The platform will initially cover cities including Shanghai, Beijing and Hangzhou and expand nationwide by the end of March. A Ctrip customer demanded compensation of RMB 800,000 and a public apology after discovering that two flight insurance policies he had purchased were due to expire while he was still in the air. Ctrip addressed the issue by giving the customer two new insurance policies before his flight.

Mobile/Wireless

- Lenovo Mobile Communications is to enhance its investment in the production of CDMA terminals in 2009, as an effort to lift its descending position in the Chinese mobile phone market. In the fourth quarter of 2007, the company snatched a 6 percent share of the market in terms of sales, taking the fourth place among mobile phone manufacturers. Lenovo launched several types of mobile phones capable of playing online videos. In cooperation with China Mobile, it is developing a mobile phone applicable to the Google Android platform. And it is one of the developers of the China Mobile OMS intelligent cellphone platform. The China Telecom CDMA terminal cake is not only for Lenovo Mobile. By the end of 2008, eSurfing Telecom Terminal had launched about 60 types of mobile phones through an online platform, including those products branded with Nokia, Motorola, Samsung, LG, Alcatel-Lucent, ZTE and Huawei.

- China's mobile phone game market is expected to be valued at 4.2 billion yuan (US$614.7 million) by 2011, enjoying an annual average growth rate of 147.9 percent. Sales of Chinese mobile telecom operators from mobile games will be growing at the pace of 143.3 percent. Income of service providers is expected to move forward at the rate of 348 percent. The fast growth of mobile phone games is driven mainly by the proliferation of mobile phone games, mounting demand of Chinese Internet users for leisure entertainment, the rapid penetration of JAVA and BREW mobile phones, and the debut of 3G applications. The market is thwarted by several factors such as the scarcity of quality games, players' unwillingness to pay for the games, and the seriously homogenous games. Mobile phone game designers need to come up with more good games to meet demand of players.

Telecommunications

- According to China Daily, China's telecom regulator, the MIIT, has ordered China Telecom (HK:728; US:CHA) and China Unicom (HK:762; US:CHU) to close their Xiaolingtong wireless service within three years by 2011. The regulators are concerned the 1900-1920MHz range service could interfere with TD-SCDMA signals, which operates in the 1880-1900MHz spectrum. Based on the Japanese Personal Access System (PAS) technology, the rival services have 68.9 million users, although this has fallen by 15.6 million since 2007. Since launch in 2001, Xiaolingtong has won customers as a low-cost alternative to cellular services. It also offered the two fixed-line carriers, Telecom and Netcom, a means to compete against mobile operators.

- China Unicom announced that its previously proposed acquisitions of some assets and business from Unicom and Netcom parents had been completed by January 31, 2009. China Unicom announced the proposition was passed during the special meeting of its shareholders. The conditions precedent to the completion of the Proposed Acquisitions and the Lease becoming effective were satisfied on January 31, 2009. The profits and losses generated from the operation of the target assets and business were assumed by China Unicom with the effect starting on January 1, 2009.

- The CDMA handset market recorded a sale of 1.29 million sets in December 2008, representing an increase of 33.6 percent as compared to the corresponding period one year ago, increased 183 percent from the previous month. Latest statistics from China Telecom, the biggest CDMA service provider in this country, indicate that it has narrowed the CDMA subscriber turnover rate from 430,000 in last November to 60,000 by the end of December. Among the CDMA mobile phone sales, 46 percent were generated by Chinese domestic brands. Huawei, Coolpad and ZTE gained the first three places in the CDMA mobile phone market. The sudden rally and fast growth of CDMA handset sales were largely driven by the recently-launched WCDMA 3G services by China Telecom. China Telecom had customized over 100 CDMA handsets, covering markets at all levels. Yang Xiaowei, vice president of China Telecom, once disclosed that China Telecom would procure 50 million CDMA mobile phones in 2009, and 100 million in the coming three years.