Ericsson releases consumer behavior report on rural China
Sharp decline in ownership of fixed-line phones as ownership of mobile phones increases significantly
Internet via mobile phone becomes more popular; 20 percent of rural mobile subscribers chat using mobile instant-messaging tools
Nearly 50 percent of respondents own or plan to buy home PCs, which are now must-have wedding gifts
More than 80 percent of home PCs now have internet connections; browsing news sites is the prime driving force for obtaining internet access
In rural China, 670 million mobile subscribers – equivalent to half of the country’s population – have started actively demanding internet access anytime, anywhere. What does this trend mean for China’s telecom market? How should operators meet these consumers’ communication needs in terms of mobile phones, computers and the internet? A qualitative and quantitative study carried out by Ericsson ConsumerLab in late 2010 and early 2011 helps shed light on these questions.
The study covers rural areas in 18 provinces across China, including interviews with more than 2,000 local villagers, and the research represents the opinions of more than 200 million Chinese rural consumers. The respondents are aged 15 to 55, with average annual household income of CNY 30,168 (USD 4,658), and 80 percent of these households have an annual income of less than CNY 60,000 (USD 9,260).
The study reveals that, in rural China, ownership of fixed-line phones has declined to 46 percent, while ownership of mobile phones has increased to 90 percent. Ownership of home PCs has reached 31 percent, and 16 percent of respondents indicated that they planned to purchase a PC in the next 12 months. Individual entertainment such as using a PC to browse the web, or a mobile phone to chat online, is becoming more popular among rural Chinese residents. In all, 41 percent of the respondents said that “internet access anytime, anywhere” was very important to them.
Mats H Olsson, President of Region China & North East Asia, says: “For the telecom industry, rural Chinese consumers represent an enormous consumer group yet to be developed. With the economic conditions in rural China gradually improving, rural Chinese consumers will inevitably raise their standards for communications tools and methods. The report provides insight into the consumer behavior of this important group and the development of the rural telecom market here in China. The ability of operators and the ICT industry to provide differentiated products and services to better meet the needs of people in rural China will prove to be highly significant.”
The study encompasses rural consumers’ lifestyles, their attitudes towards high-tech products, their communication needs and their use of the internet and mobile phones.
Key findings
Lifestyles in rural areas, and rural consumers’ attitudes towards high-tech products
In recent years, economic conditions in rural China have improved remarkably. Residents’ income has increased rapidly, and in 2010 their net income had a higher growth rate than that of urban residents. About 25 percent of respondents indicated that their income had increased during the previous 12 months. The gradual expansion of social-security benefits such as medical insurance and pension insurance is further improving the living conditions of rural residents, leading to greater consumption power. In addition, 82 percent of the respondents indicated that they were confident that economic conditions would improve in the next 12 months, laying the foundation for further development of the rural market.
By carrying out the “Connect All Villages” project, the Chinese government has invested in ICT infrastructure in rural areas. The government has also promoted a policy known as “electrical appliances to the countryside”, and one of the results of this policy is that a higher percentage of rural Chinese consumers now have PCs at home. Today, like TV sets, refrigerators and washing machines, the home PC has become a must-have wedding gift for rural residents. At the end of 2011, 31 percent of the respondents (an 18 percent increase from 2008) said that they had home PCs and 16 percent reported that they planned to purchase a computer in the next 12 months.
Rural residents have also changed the way they spend their leisure time and receive their information. Although close interpersonal contact still remains a tradition of rural society, the use of computers and the internet for entertainment and information has become a part of life for many rural residents. The number of respondents using the internet to find information rose from 24 percent in 2008 to 33 percent in 2011.
There have also been significant changes in rural residents’ attitudes towards high-tech products. In 2008, only 18 percent of rural residents said that they constantly looked for the most advanced high-tech products. However, by the beginning of 2011, the figure had risen to 40 percent. The main reason behind this change is the emergence of a dual lifestyle, meaning that tradition and modernity coexist. Rural residents are able to accept new technologies, but do not actively pursue them. However, rural residents’ attitudes towards the internet have changed significantly. In 2008, 19 percent of respondents who did not use the internet said that they “did not need it”, and only 26 percent indicated that internet access anytime, anywhere was highly important to them. However, at the beginning of 2011, 41 percent of the respondents indicated that internet access anytime, anywhere was very important to them, while only 2 percent of those who did not use the internet said that they “did not need it”.
Although there have generally been remarkable increases in the consumption of communication products in rural China, different users are in different phases of ICT adoption.
ICT needs of rural Chinese consumers
ICT needs in rural China can be divided into three phases: Access, Reliability, and More Options. Because different rural consumers are in different phases of ICT adoption, those responsible for ICT products development should consider different consumer needs.
In the Access phase, consumers mostly focus on the availability of computer terminals and network services. To meet the needs of rural users in this phase, it is important to provide network access and reduce barriers that prevent users from obtaining devices that can access the internet, such as computers and mobile phones. In this study, rural users who said that they had no internet connection but were interested in using the internet reported that a lack of computers was the main reason they did not go online.
Rural users in the Reliability phase have access to the network and computer terminals. Their main concern is whether the network is reliable and offers stable service, and whether they will be able to communicate more easily. As rural residents become more mobile, they are increasingly choosing to replace fixed-line phones with mobile phones.
In the study, 79 percent of rural residents said that the mobile phone was their main communication tool, while only 18 percent mentioned fixed-line phones. In addition, 71 percent said that they would replace their fixed-line phones with mobile phones if the charges remained on the same level. To meet the needs of users in this phase, operators may find it useful to provide more extensive network coverage and more reliable services so that they can win the loyalty of existing users and build a foundation for future development.
Rural residents in the More Options phase (mostly young people and early adopters) have confidence in the networks and services, are familiar with the use of computers, and have developed diversified communications needs. Users in this phase are more concerned about having additional choices to suit their needs. This means that operators will benefit by providing more options in terms of services and devices for consumers to choose from.
Internet use
The study shows that, in rural China, 84 percent of home PCs are connected to the internet, and one-third of rural residents have used the internet. The main location where users access the internet has changed from “internet café” to “home”. The study indicated that 64 percent of rural internet users go online at home every week and that the percentage of rural residents who use the internet in other locations, such as internet cafés, has declined to 22 percent.
The main reasons that rural consumers use the internet are also changing. One of the main reasons that rural consumers now invest in internet connections is so that they can read the news online (63 percent of respondents chose this reason).
The most popular services among rural internet users include web browsing and online chatting using instant-messaging (IM) software. More than half of the respondents reported using these two services daily. In addition to web browsing, online chatting and reading the news, a large proportion of rural users also download music or movies each week; 19 percent of rural internet users reported downloading music or movies at least daily. Moreover, online gaming is also a frequently used internet service.
Use of mobile phones and mobile services
As shown in the study, rural residents’ ownership of fixed-line phones has declined, from 61 percent in 2008 to 43 percent in early 2011, while ownership of mobile phones increased from 70 percent in 2008 to 90 percent in early 2011. To a great extent, mobile phones are replacing fixed-line phones. Moreover, for rural consumers, the mobile phone is no longer the luxury item it was about two years ago, and more and more consumers can now afford to buy mobile phones with a wide variety of functions. The study also shows that most rural mobile-phone users own new mobile phones and that 95 percent of mobile-phone users are also the main users of their phone.
In terms of the use of mobile services, the use of voice calls tends to be fragmented. The study shows that 26 percent of rural mobile users make or receive five to 10 voice calls daily, and the use of mobile phones for communication is becoming more and more popular among rural users.
Apart from voice calls, rural mobile subscribers use an average of five mobile services per week. The survey indicates that 73 percent of mobile-phone users use the phonebook function at least once a week, followed by SMS (71 percent), MP3 (45 percent), calendar (44 percent) and camera (28 percent).
In addition to these basic functions and services, rural mobile consumers tend to use a variety of services. There have been obvious increases in the use of the WAP (or internet access) service. The study shows that 27 percent of rural mobile subscribers use the WAP service mostly for online chatting and 24 percent use IM software for chatting at least once a week. In addition, 22 percent of rural mobile subscribers use the WAP service each week.
Implications for operators
In China’s rural communication market, significant changes have occurred in consumer attitudes towards the internet. The internet is becoming more popular every day. Despite remarkable increases in the rates of rural ownership of home PCs, the figures still lag far behind those of urban areas. The computer remains a luxury item for rural residents, and a lack of computers is the most significant barrier that prevents rural consumers from using the internet.
In contrast, it has become easier for rural Chinese consumers to acquire mobile phones. More and more consumers are using mobile internet services, and the mobile phone is a significant alternative for rural consumers who want to access the internet. This indicates enormous opportunities for the future development of mobile internet in the rural Chinese market.
Ericsson ConsumerLab studies how consumers act and what they think about telecom products and services, helping operators understand their customers and develop revenue-generating strategies. It is based on a global research program built on yearly interviews with 40,000 consumers in more than 30 countries, representing the opinions of more than 1.1 billion people. The global research program is built on both quantitative and qualitative consumer market research, covering both general market and consumer trends as well as in-depth insights into specific areas.
Internet via mobile phone becomes more popular; 20 percent of rural mobile subscribers chat using mobile instant-messaging tools
Nearly 50 percent of respondents own or plan to buy home PCs, which are now must-have wedding gifts
More than 80 percent of home PCs now have internet connections; browsing news sites is the prime driving force for obtaining internet access
In rural China, 670 million mobile subscribers – equivalent to half of the country’s population – have started actively demanding internet access anytime, anywhere. What does this trend mean for China’s telecom market? How should operators meet these consumers’ communication needs in terms of mobile phones, computers and the internet? A qualitative and quantitative study carried out by Ericsson ConsumerLab in late 2010 and early 2011 helps shed light on these questions.
The study covers rural areas in 18 provinces across China, including interviews with more than 2,000 local villagers, and the research represents the opinions of more than 200 million Chinese rural consumers. The respondents are aged 15 to 55, with average annual household income of CNY 30,168 (USD 4,658), and 80 percent of these households have an annual income of less than CNY 60,000 (USD 9,260).
The study reveals that, in rural China, ownership of fixed-line phones has declined to 46 percent, while ownership of mobile phones has increased to 90 percent. Ownership of home PCs has reached 31 percent, and 16 percent of respondents indicated that they planned to purchase a PC in the next 12 months. Individual entertainment such as using a PC to browse the web, or a mobile phone to chat online, is becoming more popular among rural Chinese residents. In all, 41 percent of the respondents said that “internet access anytime, anywhere” was very important to them.
Mats H Olsson, President of Region China & North East Asia, says: “For the telecom industry, rural Chinese consumers represent an enormous consumer group yet to be developed. With the economic conditions in rural China gradually improving, rural Chinese consumers will inevitably raise their standards for communications tools and methods. The report provides insight into the consumer behavior of this important group and the development of the rural telecom market here in China. The ability of operators and the ICT industry to provide differentiated products and services to better meet the needs of people in rural China will prove to be highly significant.”
The study encompasses rural consumers’ lifestyles, their attitudes towards high-tech products, their communication needs and their use of the internet and mobile phones.
Key findings
Lifestyles in rural areas, and rural consumers’ attitudes towards high-tech products
In recent years, economic conditions in rural China have improved remarkably. Residents’ income has increased rapidly, and in 2010 their net income had a higher growth rate than that of urban residents. About 25 percent of respondents indicated that their income had increased during the previous 12 months. The gradual expansion of social-security benefits such as medical insurance and pension insurance is further improving the living conditions of rural residents, leading to greater consumption power. In addition, 82 percent of the respondents indicated that they were confident that economic conditions would improve in the next 12 months, laying the foundation for further development of the rural market.
By carrying out the “Connect All Villages” project, the Chinese government has invested in ICT infrastructure in rural areas. The government has also promoted a policy known as “electrical appliances to the countryside”, and one of the results of this policy is that a higher percentage of rural Chinese consumers now have PCs at home. Today, like TV sets, refrigerators and washing machines, the home PC has become a must-have wedding gift for rural residents. At the end of 2011, 31 percent of the respondents (an 18 percent increase from 2008) said that they had home PCs and 16 percent reported that they planned to purchase a computer in the next 12 months.
Rural residents have also changed the way they spend their leisure time and receive their information. Although close interpersonal contact still remains a tradition of rural society, the use of computers and the internet for entertainment and information has become a part of life for many rural residents. The number of respondents using the internet to find information rose from 24 percent in 2008 to 33 percent in 2011.
There have also been significant changes in rural residents’ attitudes towards high-tech products. In 2008, only 18 percent of rural residents said that they constantly looked for the most advanced high-tech products. However, by the beginning of 2011, the figure had risen to 40 percent. The main reason behind this change is the emergence of a dual lifestyle, meaning that tradition and modernity coexist. Rural residents are able to accept new technologies, but do not actively pursue them. However, rural residents’ attitudes towards the internet have changed significantly. In 2008, 19 percent of respondents who did not use the internet said that they “did not need it”, and only 26 percent indicated that internet access anytime, anywhere was highly important to them. However, at the beginning of 2011, 41 percent of the respondents indicated that internet access anytime, anywhere was very important to them, while only 2 percent of those who did not use the internet said that they “did not need it”.
Although there have generally been remarkable increases in the consumption of communication products in rural China, different users are in different phases of ICT adoption.
ICT needs of rural Chinese consumers
ICT needs in rural China can be divided into three phases: Access, Reliability, and More Options. Because different rural consumers are in different phases of ICT adoption, those responsible for ICT products development should consider different consumer needs.
In the Access phase, consumers mostly focus on the availability of computer terminals and network services. To meet the needs of rural users in this phase, it is important to provide network access and reduce barriers that prevent users from obtaining devices that can access the internet, such as computers and mobile phones. In this study, rural users who said that they had no internet connection but were interested in using the internet reported that a lack of computers was the main reason they did not go online.
Rural users in the Reliability phase have access to the network and computer terminals. Their main concern is whether the network is reliable and offers stable service, and whether they will be able to communicate more easily. As rural residents become more mobile, they are increasingly choosing to replace fixed-line phones with mobile phones.
In the study, 79 percent of rural residents said that the mobile phone was their main communication tool, while only 18 percent mentioned fixed-line phones. In addition, 71 percent said that they would replace their fixed-line phones with mobile phones if the charges remained on the same level. To meet the needs of users in this phase, operators may find it useful to provide more extensive network coverage and more reliable services so that they can win the loyalty of existing users and build a foundation for future development.
Rural residents in the More Options phase (mostly young people and early adopters) have confidence in the networks and services, are familiar with the use of computers, and have developed diversified communications needs. Users in this phase are more concerned about having additional choices to suit their needs. This means that operators will benefit by providing more options in terms of services and devices for consumers to choose from.
Internet use
The study shows that, in rural China, 84 percent of home PCs are connected to the internet, and one-third of rural residents have used the internet. The main location where users access the internet has changed from “internet café” to “home”. The study indicated that 64 percent of rural internet users go online at home every week and that the percentage of rural residents who use the internet in other locations, such as internet cafés, has declined to 22 percent.
The main reasons that rural consumers use the internet are also changing. One of the main reasons that rural consumers now invest in internet connections is so that they can read the news online (63 percent of respondents chose this reason).
The most popular services among rural internet users include web browsing and online chatting using instant-messaging (IM) software. More than half of the respondents reported using these two services daily. In addition to web browsing, online chatting and reading the news, a large proportion of rural users also download music or movies each week; 19 percent of rural internet users reported downloading music or movies at least daily. Moreover, online gaming is also a frequently used internet service.
Use of mobile phones and mobile services
As shown in the study, rural residents’ ownership of fixed-line phones has declined, from 61 percent in 2008 to 43 percent in early 2011, while ownership of mobile phones increased from 70 percent in 2008 to 90 percent in early 2011. To a great extent, mobile phones are replacing fixed-line phones. Moreover, for rural consumers, the mobile phone is no longer the luxury item it was about two years ago, and more and more consumers can now afford to buy mobile phones with a wide variety of functions. The study also shows that most rural mobile-phone users own new mobile phones and that 95 percent of mobile-phone users are also the main users of their phone.
In terms of the use of mobile services, the use of voice calls tends to be fragmented. The study shows that 26 percent of rural mobile users make or receive five to 10 voice calls daily, and the use of mobile phones for communication is becoming more and more popular among rural users.
Apart from voice calls, rural mobile subscribers use an average of five mobile services per week. The survey indicates that 73 percent of mobile-phone users use the phonebook function at least once a week, followed by SMS (71 percent), MP3 (45 percent), calendar (44 percent) and camera (28 percent).
In addition to these basic functions and services, rural mobile consumers tend to use a variety of services. There have been obvious increases in the use of the WAP (or internet access) service. The study shows that 27 percent of rural mobile subscribers use the WAP service mostly for online chatting and 24 percent use IM software for chatting at least once a week. In addition, 22 percent of rural mobile subscribers use the WAP service each week.
Implications for operators
In China’s rural communication market, significant changes have occurred in consumer attitudes towards the internet. The internet is becoming more popular every day. Despite remarkable increases in the rates of rural ownership of home PCs, the figures still lag far behind those of urban areas. The computer remains a luxury item for rural residents, and a lack of computers is the most significant barrier that prevents rural consumers from using the internet.
In contrast, it has become easier for rural Chinese consumers to acquire mobile phones. More and more consumers are using mobile internet services, and the mobile phone is a significant alternative for rural consumers who want to access the internet. This indicates enormous opportunities for the future development of mobile internet in the rural Chinese market.
Ericsson ConsumerLab studies how consumers act and what they think about telecom products and services, helping operators understand their customers and develop revenue-generating strategies. It is based on a global research program built on yearly interviews with 40,000 consumers in more than 30 countries, representing the opinions of more than 1.1 billion people. The global research program is built on both quantitative and qualitative consumer market research, covering both general market and consumer trends as well as in-depth insights into specific areas.
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