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M-Commerce Market in China and Globally

M-commerce (mobile e-commerce) incorporates a range of mobile-driven applications, including payments for parking and theatre tickets (m-payments) to mobile banking (m-banking). M-commerce is a broad field incorporating a large variety of services and business models.

In 2011, according to Gartner Group, over 15 billion apps are expected to be downloaded worldwide via app stores. They also estimated app store revenues alone reached over $5 billion in 2010 (incorporating revenue generated from both apps purchases and advertising).

Within two years the size of the m-commerce market had surpassed that of the mobile portal market. As such, the total market has more than doubled and is currently growing between 50% and 100%.

While this of course will taper off, the reality is that the overall size of the m-commerce market will continue to grow into billions of dollars. By 2015, almost $200 billion in revenue will be generated worldwide by goods and services purchased via mobile devices, according to a forecast by Fierce Wireless.

The nature of this market is rather complex but in broad terms, revenue is being generated by:

  • Mobile operators who are generating revenues from access charges and, to a certain extent, also from m-payment fees they collect;
  • The content providers, through their Apps. While 80%+ of all Apps are free the 20% paid-for apps are already representing several hundreds of millions of dollars worth in revenue;
  • Companies who are using the mobile facilities for selling their goods and services.

There are two advantages that m-commerce seems to have over e-commerce. First, mobile phones are more prevalent than PCs by far. Second, it is possible for retailers to partner up with the mobile operators and arrange for purchases to be included on the monthly postpaid subscription bills.

In 2005, TOM partnered with Union Mobile Pay, the sole authorised mobile payment gateway on China Mobile’s platform, to jointly develop and market bank card, debit card and credit card-based mobile payment products and services in China. TOM Online runs a web portal through which people can download services, such as games and messaging services, to their mobile phones. Customers generally pay for those services through their mobile phone bill. The deal with Union Pay, however, would allow people to buy much more expensive items such as plane tickets.

In 2007, China Unicom and Smartpay Jieyin, an electronic payment service provider in China, with other participating partners, launched ‘China Unicom Mobile Wallet’ in Guangdong Province. With the launch, China Unicom subscribers were able to access m-payment services using Unicom Mobile Wallet after registering. These services include mobile top-up, payment of utility bills, purchasing of lottery tickets, insurance and other multifunctional services. Guangdong Unicom users could settle these payments via mobile phones instead of cash and credit cards.

China’s m-commerce market reached RMB1.3 billion (US$163 million) in 2006 and was forecast to reach RMB7.6 billion (US$953 million) by 2010.

Mobile payment services in China are characterised by two main types: local payment and remote payment services. Local payment and bank account-based remote payment services are still in their early stages, while non-bank account-based remote payment services are the mainstream of China’s mobile payment services market. Both subscriber identity module (SIM) card-based payment solutions and non-SIM card-based near field communications (NFC) payment solutions remain in the trial stages.

The number of users of remote payment services is expected to double by the end of 2013, with transaction value approaching US$14 billion. The number of local payment users will represent nearly 60 million users and approach US$4 billion.

The Mobile Payments & NFC Asia 2011 conference in Hong Kong, 13-15 July 2011 hosted by Symphony Global will feature many case studies from Asia—listen to new developments in China and Asia as it represents a huge market for players and understand where the opportunities are for future alliances and partnerships. For more information see: Mobile Payments & NFC Asia 2011

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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