Mobile services providing information relevant to a user's location are proving popular with business users in China, and sales will grow as a wider range of suitable handsets become available, according to research firm In-Stat. 

Personal navigation and local information services have proved particularly popular among early adopters in the country.

Mobile location-based services are a potential source of growth for wireless carriers, service providers, navigation software vendors and mobile phone manufacturers, according to the In-Stat researchers.

"In the future, we believe that services that combine location-based and other mobile value-added services will be very competitive," said Frances Guan, an In-Stat research analyst based in China.

However, while users find service prices acceptable, a lack of affordable handsets equipped with GPS is retarding the growth of the location-based services market in China. Early adopters have also found existing software and interfaces hard to use.

But Guan predicted that these barriers to market growth are on the way out. "Falling GPS phone prices, and more attractive and easy-to-use applications, will see mobile location-based services accepted on a large scale," she said.

A recent In-Stat survey showed that location-based services in China are most popular with the under 40s, particularly "students and technical engineers with high and middle range incomes".

Most existing users of the services are business people with above-average incomes, In-Stat's survey found.