China’s telecom behemoths are literally bursting at the seams with all manner of technology but in reality, they’re closer to a brick-and-mortar operation than an internet-era industry.
Consider this: China Mobile, China Telecom and China Unicom collectively operate 600,000 mobile phone outlets across the country, 10 percent of which are self-owned.
That’s a lot of handsets moving over the counter given that just 10 percent of sales by the big three are made online, China Securities Journal reports.
In addition, most of their customers pay their phone bills at physical shops and only 20 percent use e-channels.
By contrast, popular young handset maker Xiaomi sells every single unit of its eponymous device online. That keeps distribution costs low, inventories manageable and, more importantly, it creates a certain kind of buzz for the product.
Other mobile phone retailers are similarly plugged in. Vodafone does 80 percent of its business online while AT&T, Japan’s DOCOMO and South Korea’s SK Telecom use the internet extensively.
If the big three are being complacent because of their virtual lock on the market, the entry of virtual mobile network operators and the ongoing liberalization of mobile tariffs should give them a reality check.
To be sure, the huge savings potential of an internet-enabled operation is not lost on them. Just think how much they’ll save in rental costs, payroll and customer service charges.
Also, they’re likely aware — even if they’re not yet losing sleep over it — that their traditional dominance in voice and SMS services is being eroded by the day by instant messaging apps such as WeChat.
Gone are the days when owning network capacity guaranteed profits. The internet and the innovative products and services that have prospered with it are changing the rules of the marketplace.
It’s a paradigm shift that will take smarts, more than heft, to survive.
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