The number of smartphones shipped on the Chinese market slipped 4 percent year-on-year to 98.8 million units, the first decline in six years, as the China smartphone market continues to mature, a report by the IDC revealed. On a sequential basis, the market contracted 8 percent on the back of a large inventory buildup at the end of last year.
IDC expects relatively flat growth for China this year as the market becomes increasingly saturated. Most of the market’s growth will come from sub-USD 150 phones as feature phone users switch to low-cost smartphones. Convincing existing users as well as feature phone users to upgrade to new smartphones will now be the key to further growth in the China market, the report said.
Apple was the top smartphone vendor, with its market share growing to 14.7 percent from 8.7 percent the year before, and the number of devices shipped going to 14.5 million from 8.9 million. Xiaomi fell to second position as it faced strong competition from other vendors in the low to mid-range segment of the market, with its market share still rising to 13.7 percent from 9.2 percent and the number of devices shipped going to 13.5 million from 9.5 million. Huawei maintained third position as it saw a good uptake in the mid-range segment. Its market share lifted to 11.4 percent from 7.8 percent and the number of devices shipped went to 11.2 million from 8.0.
Samsung and Lenovo both led the market at least once last year, but have since gone to position 4 and 5, respectively. Samsung’s market share fell to 9.7 percent from 19.9 percent and the number of devices shipped slid to 8.2 million from 10.5. For Lenovo, the market share went lower to 8.3 percent from 10.2 percent and the number of devices shipped amounted to 8.2 million from 10.5 million.
Trends this year will include multi-brand strategies, as Huawei and ZTE position younger sub-brands Honor and nubia, respectively, to chip away at Xiaomi's user base, and to attempt to gain a loyal fanbase. Lenovo will also move in this direction with the acquisition of Motorola and its upcoming online-focused Shenqi division. There will also be higher price tier competition as vendors such as Huawei, Lenovo, and Xiaomi try to push higher into the mid to high-end segment.
Manufacturers will also try non-traditional channel strategies on the back of reduced operator subsidies. They will further expand channels into more vendor-branded retail shops, direct online sales, and eTailers instead. In particular, they will try to save on the cost that they had to pay to the traditional dealers/distributors in the past. Finally, all will look beyond the slowing Chinese market to India and Southeast Asia.
