Think Technology: China Internet and Wireless Report

Filed in archive Technology Report on June 6, 2006

Michael Zhang from San Francisco based Think Equity has kindly forwarded to us their updated report, ThinkChina on China's Internet and Wireless trends. CVN knows it is imperative to watch China's mobile growth. After all, China had approximately 404.1 million mobile phone users in February 2006, which is 60 million more than the a year ago. Analysts predict China will add another 50 million to 60 million mobile phone users in 2006 and it's expected that China will have over 600 million mobile phone users by the end of 2008. Think about those numbers.

Here are some of the key highlights provided by Think Equity to CVN and our readers.

KEY HIGHLIGHTS:

China's mobile market has been following that of Korea and Japan. Virtually all value-added services were first introduced in the two nations before appearing in China.

While the number of the mobile subscribers in China is 10x larger than that of South Korea, the WVAS market just crossed the $1 bilion mark at the end of 2005. Think Equity believes that given the size of the China's mobile market and the cultural similarity of the three, that China's WVAS market has great potential despite of some hiccups in the last 18 months.

• On June 2, the Ministry of Information Industry (MII) announced a program to crack down on the fee charging traps in the SMS market to protect the consumers' "legal rights." Think Equity has not witnessed any any tangible evidence indicating the timing and scope of the clean-up discussed.

• While the stock prices are likely to be volatile in near term, Think Equity suggests that investors look beyond the next few months and focus on the significant potential in the WVAS market over longer term. In specifics, the industry leader Tom Online's stock price declined over 11 percent in the past week. According to Think Equity, this is an over reaction, even if the company has to migrate its IVR services to the proprietary billing platform to a third party one.

• Finally, both ThinkChina Internet and ThinkChina WVAS indexes underperformed the market, declining 1.4 percent and 3.3 percent, respectively.

Look for more ThinkEquity China reports here at CVN.