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Wednesday, May 28, 2014, 07:51 am PT (10:51 am ET)

Chinese mobile phone market set to overtake US as Apple preps China retail push

Chinese consumers will spend more than $87 billion on mobile phones in 2014, a Wednesday report predicts, pushing revenues in the Asian giant's mobile market well past those in the U.S. in advance of Apple's planned Chinese retail expansion.

China Mobile


In contrast, mobile phone revenues in the U.S. are forecast to reach just $60 billion this year, predictive analysis firm Strategy Analytics said. That would represent a 15 percent year-over-year increase in China against flat growth in the U.S.

"China's impressive mobile growth is being driven by the country's rapid shift to 3G and 4G smartphones," said Strategy Analytics senior analyst Woody Oh.

Apple has played an important part in that shift, with the iPhone responsible for about half of the 2.8 million 4G subscribers on China Mobile, the world's largest wireless carrier. Meanwhile, on smaller competitor China Telecom, the iPhone has helped boost 3G revenues by nearly 30 percent.
China will surpass the U.S. in overall revenue, but America continues to lead in mobile phone profits.
"The United States is maturing and has now lost its crown to China as the world's largest mobile phone market by revenue," added Strategy Analytics executive director Neil Mawston. "However, it is important to remember the US remains by far the mobile industry's most valuable country by profit."

The U.S. maintains that position thanks in large part to a preference for more advanced handsets that command higher average selling prices and larger subsidies from wireless carriers.

Apple booked a 21 percent revenue increase in China during the first two quarters of 2014, making the country Apple's fastest-growing market. Apple CEO Tim Cook has committed to serve that growing clientele with a massive retail expansion led by new retail stores chief Angela Ahrendts, who oversaw a similar expansion for British fashion label Burberry.

"We plan to triple the number of Apple Retail Stores [in China] over the next two years. We're continuing to expand in online. We're continuing to build out channels," Cook said during the company's last earnings call. "We're up to 40,000 points of sales now in iPhone, but we're not nearly where we need to be on the rest of our product line and even the 40,000 is a low number in considering the broad landmass and the number of folks in China. And so, I feel like there's still loads of opportunity there, and feel really, really good about how we're doing."