SWOT Analysis China Mobile

Corporate Overview
China Mobile Limited was started in 1997. Originally it was called China Telecom
(Hong Kong) and then China Mobile (Hong Kong) and finally China Mobile Limited
as we know it today. Its public offering in 1997 generated capital of USD $2.5
million, and a further massive investment of global capital (around USD $600
million) was made in 2004. Today it trades in 31 provinces of China and essentially
offers a Global System for Mobile Communications (GSM) which covers almost the
entire nation. The business makes money from its voice-based services and other
value-added services such as SMS text, mobile e-mail and similar services.

Strengths
• China Mobile was listed fifth in Millward Brown's Brandz Top 100 Brands in
2007. This would have be unheard of 10 years ago (or even less). The news
means that the company is becoming more than a business since it is now also
a brand i.e. possessing brand equity and brand value. Other Chinese brands to
break the top 100 were the Bank of China, the Chinese Construction Bank and
IBBC. It is argued by many that Chinese companies are not strong in relation
to marketing but perhaps things are changing.
• The company has made good profits over recent years.
• China Mobile has gone down the acquisition trail on a number of occasions. In
its early days it took over Jiangsu Mobile (1997). Other important acquisitions
include Fujian Mobile, Henan Mobile, and Hainan Mobile (1999); - and
Beijing Mobile, Shanghai Mobile, Tianjin Mobile and Hebei Mobile (2000).
These developments have delivered strong growth.
• China Mobile is number one in the Chinese market. It recorded a 67.5%
market share in 2006. It is the world's largest digital mobile company, and
serves more customers than any other mobile supplier.

Weaknesses
• According to the head of China Mobile, China's home-grown mobile
technology is a few years behind that of its international competitors since it
was having problems with handsets. Essentially 3G technology was lagging
behind. Part of the problem was the choice to swap to TD-SCDMA's network
which many would consider inferior to the 3G technology offered by
European and American alternatives (which their competitors have decided to
adopt).
• The company is not globally diversified. Telecoms companies tend to trade in
more than one country, usually through acquisition, joint-ventures or strategic
alliances.
• This may leave the company exposed if the Chinese market were to go into a
deep or sustained decline.
Opportunities
• The Chinese economy has undergone enormous growth, which has lead to the
huge demand for mobile telephones, devices and technologies. According to
the Chinese Government, China is the world's largest mobile market with 520
million mobile phone users. This number could reach 600 million by 2010.
• Budget users in China are driving growth in the mobile telecoms sector. China
Mobile reported a net profit between January and March 2008 of around
24.1bn yuan (£3.4bn; £2.2bn) which is a rise of 37% on 2007 according to
BBC News.
• Since the cities have become saturated, much of the new growth is predicted
for rural China and it is this segment that is most likely to be targeted by the
large operators. 3G technologies provide the largest opportunity for China
Telecom.

Threats
• New subscribers are mainly low-use, low-value. So average revenue is falling
as the mobile phone market matures and the market becomes more price
competitive. So mobile phone suppliers are awaiting the introduction of 3G
mobile technologies to rejuvenate the market and stimulate demand as Chinese
customers consume the new added value services.
• China Mobile could face more competition in the future as the Chinese
Government plans to allow more operators into the market. China Mobile has
70% of the 2G market in China. China Unicom wants to become the biggest
3G operator, and China Telecom aims to win 15% of the 3G market by 2010.
• China Mobile has a number of service obligations under agreements with the
Chinese (PRC) Government. So the business may be obliged to provide
unprofitable services that pay a social dividend. Added to this the Ministry of
Information and Industry has allocated a limited frequency (44MHz) to the
company which will not support large numbers of subscribers in the future.