Pacific Perspective
Pacific Perspective
It's now official. According to the Chinese government, China had 120.6 million mobile phone users as of the end of July 2001, taking the number one position away from the United States, which had 120.1 million subscribers. By the end of this month, 5 million more subscribers will be added to the count. Cell phone leadership in
China good for worldAt first sight, the news seems a bit unexpected. With China's income per capita still weak and mobile telephony still relatively expensive, one might expect Chinese consumers would use their growing income on other basic products and services such as clothing and household appliances.
In hindsight, the statistics should not come as a real surprise. China has the world's largest population and is expected to have more mobile telephony subscriptions. 120.6 million subscriptions may be a large number, but it represents only 10 percent of China's population. Our research suggests use should reach at least 20 percent of the population -- 325 million subscribers -- before it stabilizes. However, there are other factors that help explain the phenomenal growth of the mobile phone market. Chinese consumers have a fascination for high-tech gadgets and are fond of goods that carry respectable social status. They also strive to use technology as a means to further their business and social networks. A cell phone allows them to achieve all of these needs quickly, without having to wait for a rather expensive and not always reliable land-based telephone alternative.
As mobile telephone use is expected to reach 200 million subscribers by 2002, along with increased spending on goods and services that go beyond food and transportation needs, it seems that consumerism in China has finally come of age. This is certainly good news for China and its international trade partners. As domestic spending increases, China will be able to sustain its economic growth while being less dependent on exports. A growing Chinese economy also helps China's trade partners -- in particular Japan, the United States and Europe -- which need to improve their sluggish economies.
And yet, it is important to note the mushrooming of mobile telephony is concentrated in the eastern and coastal regions of China such as Guangdong, Shanghai and Beijing. Subscriptions in the western provinces remain far behind. As telecommunication technologies have proven to be crucial to economic development, the disparity in mobile telephone use between the regions could further the geographical economic gap. Cell phones should not be only the utensil of the privileged.
On the other hand, if this digital divide is handled appropriately, the continued growth of telecommunications use in China should offer Chinese consumers the ultimate good, the ability to freely and instantaneously access and disseminate information. Indeed, the value of telephony is not in the hardware itself, but in the value of the information the hardware helps deliver. In the long run, the fact that China leads the world in cell phones is good news for China and the world.
Tung Bui is the Matson Navigation Co. Distinguished Professor of Global Business at the University of Hawaii at Manoa College of Business Administration. Reach him at tbui@cba.hawaii.edu.