Author(s): Marina Koytcheva
According to a senior official at ZTE, Mr Michael Gao Wenhao, deputy general manager of ZTE's 5G industrial products business, the Chinese government plans to celebrate the 70th anniversary of the country's founding in a very tech-savvy way. It's working with the three home-grown mobile operators on a synchronized launch of 5G services in major metropolitan areas of China.
China Mobile, China Telecom and China Unicom — the three leading operators — will switch on between 30,000 and 50,000 5G base stations deployed in 40 mainland cities by 1 October 2019. Network equipment for the launch will be provided by domestic manufacturers ZTE and Huawei, as well as by Ericsson.
This announcement was made at a recent 5G forum in Hong Kong and reported by China Daily. The operators haven't confirmed the announcement, but it's in line with CCS Insight's expectations for the timing of 5G's arrival in the largest mobile phone market in the world.
China is too late to claim the coveted — yet arguably largely irrelevant — title of "first to launch 5G", which a number of operators and countries argue they've won (see Verizon Claims 5G Gold Medal). However, with over 1.2 billion mobile device connections, plus another 300 million machine-to-machine connections, China is poised to become the largest 5G market already in 2020. According to our latest global forecast of 5G connections, China will account for 46% of all global 5G connections at the end of 2020.
We expect China to push adoption of 5G quite keenly. The effect in 2019 will be small, as 5G will have only a small amount of time to make an impact this year, but the numbers will start adding up quickly in 2020. The country was very late with 4G, so this time around, there's a political mandate by the Chinese government to build global technology leadership through 5G. The escalating trade dispute with the US has raised the stakes further, and China will be keen to show quick adoption of the new mobile technology.
The strong position of local smartphone brands Huawei, Xiaomi, Oppo and Vivo allows for a well-orchestrated launch, with networks and devices available for commercial use. These phone-makers, in addition to Lenovo, Nubia, OnePlus, and of course, Samsung and LG, have either recently launched or are about to introduce their first 5G devices. By October 2019, it's likely that any early hiccups will have been resolved and the phones improved, ready to be offered to Chinese consumers.
We expect the three Chinese operators to be working closely with handset suppliers to ensure that devices are available in various price ranges for the Chinese New Year season in the first quarter of 2020. Manufacturers and operators will be hoping that 5G will help re-energize the Chinese smartphone market, which has been declining for a few months, hit by the macroeconomic slowdown. However, a fiscal stimulus in the form of lower value-added tax should help demand across industries, and strong promotions of 5G might bring some of this extra spending back to the mobile sector.
In the long term, 5G is hugely important in China, not only to provide more capacity and efficiency in serving smartphone users, always hungry for more data, but also for the country's fast-growing Internet of things business. We forecast that this area will remain a small contributor to 5G adoption at least to 2025. However, China has significant upside potential, should the government, operators and large industrial companies choose to push 5G even harder.
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