In today's depressed global telecommunications landscape, China Mobile enjoys a seemingly unassailable position. It is the market leader in a market where the subscriber base, climbing by as much as five million in a month as it did in July this year, is far from exploited.
As of June, China Mobile's subscriber tally stood just shy of the 130 million mark, making it the world's biggest cellular carrier. Its balance sheet is in rude health, showing double-digit growth in the first half of this year despite the Sars outbreak. Not bad for a company that only turned three this year. But threats abound for the Hong Kong- listed corporation.
Growth - while still rocketing - is slowing to 5.4 million on a median monthly basis against 2002's equivalent of 5.7 million. The slower pace reflects higher mobile phone penetration in urban areas and growing competition from non-traditional discount services offering cheaper pre- paid packages.
At present, there is a lone challenger to speak of - China Unicom - but the mainland's WTO membership promises to unleash new rivals, both domestic and international in origin. With China Unicom given regulatory permission to undercharge the former monopoly by 10 per cent, the telco is locked in a fierce pricing battle, exacerbating the slide in average revenue per user.
Part of its counter-offensive involves bolstering its multi-media short messaging product, creating a youth-oriented sub-brand and enhancing its customer-care services. In extending its youth appeal, China Mobile has been working with handset vendor Ericsson to train MMS application developers to create new MMS applications.
It is also shaking up its agency contracts, which varies market by market.
MindShare was recently handed the media planning and buying brief for Beijing, while Leo Burnett is understood to have won its GoTone customer service brand for a national assignment. However, the bulk of its advertising contract remains in the hands of a variety of agencies, making it difficult to launch an aggressive campaign that speaks in a unified brand tone.
VITAL SIGNS
June 2003 (6 months) June 2002 (6 months)
Operating revenue
(Turnover) RMB76,657 million RMB55,146 million
Ebitda RMB45,201 million RMB33,433 million
Source: China Mobile.
DIAGNOSIS
JOSH LI - Managing director, Grey Global Group, Beijing
Recent campaigns by China Mobile show that the company is making a stronger commitment in its overall brand and portfolio management and in launching consumer-oriented communications.
Campaigns for the corrporate brand and its GSM sub-brand GoTone have helped to build its equity as the market leader. Similarly, its launch campaign for the unbundled SMS service brand, M-Zone, has drawn a strong response from the emerging youth market. These efforts have helped it shed its original image as a bureaucratic organisation and move towards a market-oriented positioning.
However, the reform of China Mobile's brand is far from accomplished.
It still treats the vast GSM segment as a homogenous market although it deserves greater segmentation and more targeted value proposition. The launch of its 2.5G mobile internet service brand, Monternet, was not followed by robust user acquisition. Attitudes and promises in the M- Zone campaign have failed to follow through. Disappointing offerings in the service package has hit consumer expectations that had been inflated by the campaign.
Unless China Mobile can match product and service with the market expectations it has created, the operator risks reverting to its image as a bureaucratic monopoly.
TIGER FU - Group account director & new business director, Lowe
Its first-to-market status ensures that China Mobile is regarded as the leading brand by most Chinese consumers. It is perceived to have a more professional and reliable and image against Unicom.
Being born with an extensive network and heavy promotion of its business platforms have been the main contributors to its success to date. The advantages it enjoys from both the traditional voice and the fashionable way of communication - MMS - makes China Mobile's leadership of the market almost inevitable. Having said that, China Mobile has not done a good enough job of promoting its 2.5G mobile internet service brand Monternet.
The sub-brand for its data services, while welcomed by Chinese consumers, enjoys a lower image than China Mobile would like.
At this stage, the consumers' demand for data services hasn't been fully stimulated and communication for Montenet is vague. Neither has it helped that Unicom's U-Max has been heavily promoted and enjoys the undoubted advantage of speed, which is essential in the provision of data services.
Going by its current marketing communications, there is little reason for China Mobile to remain optimistic on its future. Its overall positioning needs a rethink as the market has since moved on.
TREATMENT
LI'S PRESCRIPTION
- The GSM market needs further segmentation in building customer loyalty through customised bundle offerings based on price, service and brand value.
- Look at expanding M-Zone into digital services.
- Bring an emotional dimension into the strong but rigid brands of China Mobile and the GoTone GSM sub-brand. As a former bureaucratic monopoly, China Mobile must create a friendlier and possibly even a more modest image for itself.
FU'S REMEDY
- China Mobile must create a clearer positioning for its sub-brands.
For example, it has made huge efforts in promoting GoTone for high-end users. However, this has created confusion in the marketplace as to its actual function, relationship and differentiation from the mother brand.
- The other headache for China Mobile is integrating its GoTone and M- Zone sub-brands in a way that makes sense since GoTone is seen as a serious brand while M-Zone is cool. A case of two extremes.