Evaluating the Market Potential for Mobile Phone Service in Chinese Provinces

Abstract

The Chinese mobile phone market has enjoyed impressive growth, however, each province in China shows different progresses. This article examines several factors explaining the different mobile phone adoption rates and presents the most efficient point of mobile phone service adoption in 31 provinces of China, based on national statistic data from 2001 through 2007, using the Stochastic Frontier Analysis Model. The results show that fixed phone penetration, network capacity, occupation structure, disposable income, and geographic location are the important factors that may influence the mobile phone adoption rate in each province. The results also present the relative market potential of each province by calculating the most efficient point of mobile phone adoption. In particular, our results imply that the market potentials are still big not only in the rich Yangtze River delta region such as Shanghai, Zhejiang and Jiangsu but also in the rural central and western areas.