by: Michael Sainsbury, China correspondent From:The Australian June 12, 201212:00AM
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AUSTRALIAN mobile application developers have an unprecedented opportunity to tap into the world's largest market as a tsunami of cheap -- sub-$200 -- smartphones begins to hit the Chinese market while the major internet brands compete to own the customer.
China's major search engine, Baidu (which has 85 per cent market share), small business trading platform Alibaba and major internet portals such as Netease, Sina and Xiaomi, have all announced plans to bring phones to market using Google's Android platform.
China's mobile subscriber base has passed the 1 billion mark and the opening for developers is bigger than usual as Chinese authorities have blocked Google's Android applications store from being used in the country as part of the government's growing battle with the US search giant after Google exited the mainland market 18 months ago in a protest over online censorship.
To bolster home-grown efforts, China forced Google to keep Android as a free operating system for five years as a condition of allowing the US company's deal with Motorola to pass regulatory muster.
"The business model is an imitation of Apple iPhone. The internet companies order manufacturers to produce the mobiles, using websites' brands, with pre-installed applications," said Wang Ying, an analyst at IT consultancy Analysys International.
"This phenomenon came from a general background that mobiles are becoming more intelligent, and 2G mobiles are of very low profit margin.
"Some mobiles are sold as cheaply as a bit more than 100 yuan ($20).
"The internet companies want to copy iPhone's model of earning profits from applications and advertisements, but unlike Apple, which designs mobiles and makes high profit from the hardware too, most Chinese internet companies don't design the phones by themselves.
"Most of the websites give orders to other manufacturers to produce the mobiles. The disadvantage of this is that although each of the websites has millions of users, the websites are not competitive in the overseas market since their users and web content are mostly Chinese."
Listed Australian group Smartrans has been a pioneer for Australian companies in the Chinese mobile sector.
It is working with the world's biggest mobile company, China Mobile -- which has 650 million subscribers -- on an application portal to distribute a range of applications, including games and theme ringtones, as well as to run a mobile lottery.
"We are sourcing much of our content from outside China, which gives others an opportunity because you need a licence inside China and we have a licence," Beijing-based Smartrans chief executive Bryan Carr said.
Zhenya Tsvetnenko, a homegrown Australian mobile phone software millionaire with a 2 per cent stake in Smartrans, sources and provides applications for the company as well as marketing and technical advice.
Mr Tsvetnenko and Smartrans also jointly own a Hong Kong company called Digi8 that sources and provides applications and mobile advertising for entrants to the China market.
Some other Australian companies were in the market, "but not many", Mr Carr said.
Chinese authorities are also developing plans to produce a local mobile operating system in much the same way they developed the indigenous version of 3G networks with time division-synchronous code division multiple access.
In an effort to level the playing field by creating three state-run mobile companies, they foisted the local technology on the major player, China Mobile
Most internet companies will sell white-label phones made by many manufacturers such as Taiwan's HTC and Foxcon.
Yang Hefang runs a sports utility shop in Beijing that sells products on the net, which is how she learned of Xiaomi mobile. "I was the second group of people to order it." Ms Yang said. "I waited to see the response of others."
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