chinamobilephone.jpgChina's telecoms market is poised to overtake Japan's by 2014 according to market research firm Pyramid Research.

It had to happen sooner or later, of course, nevertheless the prediction serves as a wake-up call for those western vendors for whom “Asia” has traditionally meant first and foremost Japan.

China's telecommunications market was worth $110bn in 2008, making it the second largest telecommunications services market in Asia-Pacific after Japan, notes Daniel Yuh, analyst at Pyramid Research.

He predicts the Chinese market will grow at a compound annual rate of 8.8% between 2009 and 2014, reaching $187bn by 2014, when it will surpass Japan as the largest telecommunications services market in Asia.

The big driver for growth in China's telecoms market, like that of many emerging economies, is mobile telecoms, with more than 71m new mobile subscribers in 2008.

Roughly 12% of all new mobile subscribers worldwide came from China, second only to India's 113m net additions. By the end of 2014, Pyramid predicts that mobile phone penetration will grow to 80% of China's population compared to 58% at the end of 2009.

Pyramid expects mobile services to account for more than 76% of total services revenue in China by 2014.

The big question, of course — and one that Pyramid does not answer — is what will happen after 2014. Will the mobile market hit a plateau with a penetration rate of around 80% or will it keep growing to achieve the 100% penetration that is common in developed economies of western Europe, for example?

The answer largely depends on how successful the government's policies are at developing China's rural economy and lifting the poorest segments of the population out of poverty.

Since 1978, hundreds of millions have been lifted out of poverty but around 10% of the population still live on less than $1 a day, which makes a mobile phone a luxury they can currently do without.

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