Abstract

Overall, mobile telecom operators such as China Mobile and China Unicom are actively pushing the development of mobile phone data services. China's mobile application software developers have favorable market development potential. At the same time, mobile telecoms and software companies are beginning to compete and collaborate more closely. Overall, both are still in a relationship where one leases networks to the other, an upstream supplier and downstream buyer model. In some sectors, however, mobile telecoms are also undertaking vertical integration, such as with IM. The potential for this market, and the goal to prevent one or two software companies dominating this market, has prompted mobile telecoms to develop their own substitute products, such as China Mobile's Fetion and China Unicom's UMS.

In the future, the role of mobile telecoms in the mobile value-added services industry chain will move from formerly plain network operations or leasing to a role that sets the overall framework and guides the industry chain. In China's mobile communications services market, China Mobile and China Unicom have created a high level of concentration. Even if China Telecom or China Netcom enters the picture, it will not change this overall situation. Most software developers will have difficulty in garnering many opportunities in this competition between mobile telecoms.

However, China's mobile communications user market is enormous and there are significant regional, lifestyle, and cultural differences. Therefore, selecting one or two regions to create a breakthrough in the market may be a viable option. In addition, although mobile communications value-added services are more developed in the markets in first-tier and second-tier cities in China, competition is extremely fierce. As government projects aimed at promoting communications services in rural areas are progressing, these rural regions could become significant potential markets for relevant software companies. An example could be mobile payment services for rural areas.