CHINA MOBILE PHONE MARKET MONTHLY

RETAIL AUDIT UPDATE

Dec/09

Room1102, Building C, Ocean International Center, No. 60 East 4th Ring Road, Chaoyang District , 100026Beijing, P.R China0086-10-5908-1099

joe@thinkbankchina.com

Table of Contents

Size Share Product Price Subscriber

Key Indicators in Dec/09Market Size | Subscribers | AV. Selling Price | Products | 3G

176Million

2009 YTD M-size (Altogether 5M 3G subscribers, added 1.2M in Dec/09)726Million

56Dec/09 M-size

Subscribers

Mobile Phone Penetration

Million

16.8Million 11

Models

56pct

Dec/09 M-size

Dec/09 ASP

141USD

# of new 3G Products

Subscriber by CarrierAs the end of Dec/09, China registered 726 million mobile phone subscribes with monthly new additions of 8.9 million. Number of total 3G subscribers reached 11 million.

Total: 148 million (20.4%)

726 millionmobile phone subscribers as the end of Dec/09, representing mobile phone penetration rate of 56%.

Total: 56 million (7.7%)

• 2G: 51.2Total: 148 million (20.4%)

• 2G: 144.8

• 3G: 2.7

New additions: 1.6

10.9 millionof 3G subscribers, i.e. 1.5% of China total mobile subscribers.

Total: 522 million (71.9%)

• 2G: 518.6

• 3G: 3.4

New additions: 4.2

• 2G: 51.2

• 3G: 4.8

New additions: 3.1

Data source: operator websites, January, 2010

Market Size Summary / YTD175.6 million sold, representing +31% Y/Y growth through the entire 2009.

2009 Year to Date Market Size

YTD Market Size Breakdown by Technology

175.6Million units

+31% Year-on-year

China Mobile Phone Market Summary

• China mobile phone market size reached 175.6 million (CTA market) in 2009, representing y/y growth of 31% in spite of the economic downturn particularly the 2nd

half of 2009.

• Altogether 3.7 million of 3G mobile phones sold in 2009, accounting for only 2% of total CTA market size.YTD Market Size Breakdown by Technology

YTD Market Size Breakdown by Market Type

2G Device Market (Million) 3G Device Market (Million)

GSM 21.2 TD-SCDMA 1.9

GPRS/EDGE 122.4 WCDMA 1.1

CDMA1X 28.3 EVDO 0.7

Market Type Sales (M) Percentage

Phones with CTA* 175.6 73%

White brands market 42.2 17%

Grey market** 22.9 10%

*CTA: Certification of Type Approval by Ministry of Industry & Information Technology**Grey market: mainly smuggling phones from overseas.

• CDMA market witnessed recorded high with 29 million units sale out in 2009, but still under China Telecom’s expectation of the beginning of the year. [China Telecom aims at 50M phone sales and 30M new user addition in 2010.]

• Combined sales volume of white brands reached 42 million units, standing for 17% of China TOTAL market, plus another 10% grey market, namely 22.9 million units in full year of 2009.

Market Size Development+14.7% M/M growth due to new year promotions in December. In addition, 9.1% of Y/Y growth is probably indicating a full recovery from economic downturn starting from June 2009.

17.0

14.215.1 14.7

15.716.8

15.6 15.1 15.414.715.3

1414.8 14.9

16.314.4

13.815

20In million units

China Total Mobile Phone Market Size Development (2G + 3G)

2009

15.6

13.114.2

13.5

15.1 15.414.715.3

13.713.213.2

12.1

5

10

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Dec/09 size M/M growth % Y/Y growth% Dec/09 3G Sales 3G M/M growth % ASP (US$)

16.8 M +14.7 +9.1 1.2 M +34.6 141

2008

Brand Market Shares / Dec/09The fragmented 2G device market is ruled by Nokia with 28.4% m-share in Dec/09, while 3G device market is dominated by Samsung with 34.1%, followed by China Local vendor Coolpad with 23.5%.

28.4%

2G Market(GSM/GPRS/EDGE/CDMA1X)

16.8 million units in Dec/09

3G Market(TD/WCDMA/EVDO)

1.2 million units in Dec/09

28.4%

15.2%

5.2%5.1%

4.2%

4.0%

2.6%

28.5%

4.5%

2.3%

Nokia

Samsung

Huawei

ZTE

Tianyu

LG

Lenovo

Motorola

OPPO

Others

23.5%10.0%

6.9%

6.5%

19.0%

34.1%Samsung

Coolpad

ZTE

SonyE

LG

Others

Brand Market Share Development-1In CTA market, combined m-share of int’l vendors increased by 0.4 percent in Dec/09.

62.3%61.9%62.2%59.7%64.5%65.0%64.2%63.7%62.3%63.5%64.8%65.9%

70%

80%

90%

100% Int'l Vendors Local Vendors

Brand Market Shave Development: Int’l Vendors VS. Local Vendors

37.7%38.1%37.8%40.3%35.5%35.0%35.8%36.3%37.7%36.5%35.3%34.2%

0%

10%

20%

30%

40%

50%

60%

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Brand Market Share Development-2Nokia still is leading China Market with 26.5% m-share after two month’s sequentially decline since Nov-09. Meanwhile, Samsung did not benefit form Nokia setback.

29.6%31.5%

29.8%30.4%31.1%31.4%31.3%28.5%28.1%28.5%

32.3%

40%

50%

Brand Market Shave Development (2G + 3G) / Top2 Brands

Nokia

26.5%29.6%29.8%28.5%28.1%28.5%

16.5%16.7%16.3%16.4%16.1%16.6%17.8%17.8%18.0%18.7%17.4%18.2%

0%

10%

20%

30%

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Samsung

Brand Market Share Development-3Tianyu experienced a decline 2009 and closed the year with 4.4% m-share. ZTE & Huawei gained continuous m-share growth due to sales surge in <400RMB price tier in CDMA market.

Brand Market Shave Development (2G + 3G) / Top 3-5 Brands

5.1%

5.8%6.2% 6.2% 6.2%

5.5%5.3%

4.9% 5.0% 4.9%4.4% 4.4%

6%

8%Tianyu

Huawei

ZTE

1.8%

3.5%4.0% 4.1%

2.8% 2.9% 3.1%3.3%

4.2%

2.8%

3.6%3.8%

4.4% 4.4%

0%

2%

4%

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Price Band Development67% of mobile phones are sold under 1,000RMB in Dec/09.

20.0%18.0%

17.1% 15.8% 15.7%15.4%

16.7% 16.2% 16.5%15.8% 15.0% 13.4%

14.6% 13.2% 12.2% 12.7% 13.2% 12.4%13.0% 12.9% 12.0%

13.3% 12.8%13.5%

6.4% 5.4% 4.8% 5.1% 5.9% 5.0% 6.0% 5.5% 5.8%6.3% 7.0% 7.7%

3.6% 3.8% 3.5% 3.1% 3.5% 3.3% 4.5% 4.3% 3.8% 3.9% 3.3% 4.8%

2.6% 3.4% 3.1% 3.9% 4.1% 3.6% 4.1% 4.5% 4.4% 5.7% 5.8% 5.8%>=3000

2500-2999

2000-2499

Price Tier Percentage Development (2G + 3G)

30.1% 32.7% 35.1% 34.0% 32.7% 32.8% 30.3% 29.3% 32.1% 29.1% 33.3% 33.1%

20.1%21.7%

22.2% 23.2% 22.5% 25.1%24.0% 25.3% 23.9%

23.4%21.1% 20.1%

20.0%18.0% 15.7% 16.7% 16.2%

15.8% 15.0% 13.4%

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

1500-1999

1000-1499

700-999

400-699

<400

Product Category10.6% total sale out is smart phone in the whole year of 2009.

Product Category Year-To-Date (M) This Month (M)

Smart phone 18.5 10.6% 2.0 12.1%

Feature phone 136.5 77.7% 13.4 79.9%

Mobile Phone Sale-out by Product Category in million units

Ultra low end 20.6 11.7% 1.3 8.0%

Total 175.6 100% 16.8 100%

Definition of Product Category

• Smart Phone: phones with open operating systems, including iPhone OS, Symbian, Windows Mobile, Android, RIM OS, etc.

• Feature Phone: phones with various of multimedia functions, such as audio/video playback,

• Ultra low end phone: phones with only telephony and SMS functions.

YTD Top 10 BrandsNokia is the biggest loser during the past three months, m-share decreased by -3.4 points in the period.

BrandYTD Sales (M)

YTD MSDec/09MS

3-monthsGrowth %

Dec/09 ASP(USD)

Dec/09 Price tier structure

Nokia 52.48 29.9% 26.5% ê-3.4 172

Samsung 30.25 17.2% 16.5% é+0.1 180

Tianyu 9.18 5.2% 4.4% ê-0.5 92 34%

30%

32%

30%

6%

20%

22%

12%

8%

14%

23%

11%

0%

5%

13%

1%

11%

5%

0%

7%

10%

Lenovo 6.37 3.6% 3.7% ê-0.3 119

Huawei 6.02 3.4% 5.1% é0.9 48

Motorola 5.76 3.3% 2.5% ê-0.3 164

LG 5.60 3.2% 4.4% é+0.6 106

ZTE 5.25 3.0% 5.4% é+2.5 58

SonyEri. 3.43 2.0% 2.0% é+0.4 234

Gionee 3.33 1.9% 1.5% ê-0.1 119 8%

5%

84%

53%

19%

89%

13%

27%

6%

2%

4%

20%

1%

31%

47%

9%

1%

13%

6%

7%

28%

15%

21%

5%

11%

27%

2%

20%

2%

42%

3%

11%

17%

1%

7%

0%

6%

0%

2%

6%

0%

0%

0%

8%

4%

5%

1%

0%

0%

3G Market Comparison / Dec/09TD-SCDMA operated by China Mobile seems leading China’s 3G market with bigger devices sales volume, cheaper devices and larger device vendor base as the end of 2009.

TD-SCDMARun by China Mobile

CDMA1x EV-DORun by China Telecom

W-CDMARun by China Unicom

Market Size (K)

ASP (USD)

707 227 233 1,167

224 421 340 286

CHINA Total

ASP (USD)

New Products

Accu. Users(M)

224 421 340 286

4 7 0 11

22 17 14 29

3.4 4.8 2.7 10.9

YTD # of Device Vendors

China Mobile Phone Market Dashboard

17.0

14.215.1 14.7

15.7

12.113.2 13.2 13.7

15.314.7

16.8

Market Size by Technology (M)Technology Size Percentage

GSM 12.1 72.0%

CDMA1X 3.5 20.8%

TD-SCDMA 0.7 4.2%

EVDO 0.2 1.5%

WCDMA 0.2 1.5%

Total 16.8 100%China Mobile Phone Monthly Market Size Development (M)

Market Size by Market Type (M)

Technology Size Percentage

CTA Market 16.8 73.4%

White Brand 3.8 16.6%

Grey Market 2.3 10.0%

Top5 Brands Market Share Development

Market Size by Price Tier (RMB)

Brand Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Nokia 32.3% 28.5% 28.1% 28.5% 31.3% 31.3% 31.1% 30.4% 29.8% 31.5% 29.6% 26.5%

Samsung 18.2% 17.4% 18.7% 18.0% 17.8% 17.8% 16.6% 16.1% 16.4% 16.3% 16.7% 16.5%

Tianyu 5.8% 6.2% 6.2% 6.2% 5.5% 5.3% 4.9% 5.0% 4.9% 3.8% 4.4% 4.4%

Motorola 3.2% 3.1% 3.1% 3.2% 3.5% 3.5% 4.0% 4.1% 4.0% 4.2% 4.1% 3.7%

LG 1.8% 3.5% 4.0% 4.1% 2.8% 2.9% 3.0% 3.3% 4.2% 2.8% 3.6% 5.1%

Key Market Indicators (M)Technology This Month Y-T-D

2G M-size 15.6 171.9

3G-M-size 1.2 3.7

Int’l Vendors 8.9 99.5

Local Vendors 76.1 7.9

ASP (USD) 141 124

Net User Addition 8.8 106.1

3G Users 1.5 10.9

New 3G Devices 11 140

CHN Total Users NA 726

Penetration % NA 54.3

Year2009

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mobile Subscriber by Operator(M)Operator Users Percentage

China Mobile 522 71.9

China Unicom 148 20.4

China Telecom 56 7.7

Market Size by Category (M)Product Cate. Size Percentage

Smart Phone 2.0 12.1%

Feature Phone 13.4 79.9%

Ultra Low End 1.3 8.0%

Indicator Total Market 2G Market 3G Market Nokia Samsung ZTE Huawei Tianyu LG Lenovo Coolpad Motorola OPPO

Dec/09 Sales (M) 16.8 15.6 1.2 4.4 2.8 0.9 0.9 0.7 0.7 0.6 0.5 0.4 0.4

YTD Sales (M) 175.6 171.9 3.7 52.5 30.2 5.2 6.0 9.2 5.6 6.4 2.0 5.8 2.5

Dec/09 Share NA NA NA 26.5% 16.5% 5.4% 5.1% 4.4% 4.4% 3.7% 2.9% 2.5% 2.2%

Dec/09 ASP (US$) 141 130 286 172 180 58 48 92 106 119 218 164 188

Market Size by Price Tier (RMB)Technology This Month Y-T-D

>3,000 5.8% 4.3%

2500-2999 1.5% 2.0%

2000-2499 4.8% 3.8%

1500-1999 7.7% 5.9%

1000-1499 13.5% 13.0%

700-999 13.4% 16.3%

400-699 20.1% 22.6%

<400 33.1% 32.1%

Total 100% 100%

Year-to-Date Market Size (M) Dec/09 Market Size (M)

175.6, +31% MoM 16.8, +9.1% YoY

Year2008

Want to know more about what’s going on with China mobile phone market and the up-to-date 3G dynamics?

Subscribe China Monthly Mobile Phone

TODAY!Market Retail Audit Report TODAY!And get this monthly update for FREE of Charge every month!

joe@thinkbankchina.com