The next wave of telematics systems in China will be based on smartphone connectivity, and will harness the power of 3G networks, says a latest report from Strategy Analytics.

China’s domestic automotive OEMs have long been aggressive and, according to the analysts, they are now seeking to outshine the service portfolio offered by their counterparts in the Western market.

Telematics service is most often determined by government policy, technology adoption as well as the culture of regional residents. But these days, telematics applications are being offered more and more as product differentiators in the automotive market.

The research firm suggested that vehicle manufacturers should take a leading role in the OEM telematics ecosystem since they can integrate all resources and components into a commercial OEM solution.

“Western OEMs are already in the market with similar products and solutions; however, Chinese OEMs can take advantage of their ability to better understand local needs and demand,” said David Xu, Senior Analyst in the Strategy Analytics (News - Alert), Automotive Multimedia and Communications (AMCS) Service.

In a report released last week, the research firm predicted that shipments of OEM telematics in China would rise 12-fold to nearly six million units between 2011 and 2018, a compound annual increase of 40 percent. “With the roll-out of telematics technology in cars, Chinese consumers will have access to a wide range of optional safety and infotainment-type telematics services by subscription,” David added.

But analysts are expressing concern at the quality of service as there are barriers to access precise traffic information and comprehensive maps.