China smartphone growth slows to just 2% in Q1

Enterprise Innovation editors
20 May 2016
00:00

Smartphones shipped to China grew a mere 2% year-on-year during the first quarter to 102.6 million units, according to IDC.

The research firm noted that the lackluster growth coincided with China’s smartphone market becoming increasingly saturated and driven mostly by replacement users.

This growth is similar to the 2% growth seen in 2015, and IDC expects the the same 2% growth for the full-year 2016.

In the first quarter, Apple continued to reign in the high-end segment, cornering 86% of the $500 price band segment. This is followed by Samsung at 12% and Huawei at 2%.

Although Apple’s iBooks and iTunes Movies services are now banned in China, this will not have any immediate impact on iPhones locally, especially since these services were only launched a few months back and Chinese consumers have other alternative platforms they can turn to.

OPPO and vivo are two Chinese vendors that have seen their shipments pick up largely due to investments made in marketing as well as increasing their distribution channels. Both target a younger demographic in China and invests heavily on sponsorships of popular entertainment television shows.

There are no major changes to the various channels in the China smartphone market. However, e-tailers such as jd.com have been aggressive in their expansion activities to attempt to reach out to more lower tiered cities. This, along with its constant promotional activities, will help them compete against the retail channels in the lower tiered cities.

It is becoming increasingly harder for vendors to differentiate themselves through hardware. In response vendors such as Apple, Huawei and most recently Xiaomi have launched their payment services in China.

“Investing in payment services may possibly help vendors to increase their revenue in the long term. But we do not think this will have any short-term impact in helping vendors to gain any new users or help increase brand loyalty,” said Jin Di, research manager of client system research of IDC China. “It will not be easy for new players to enter the market as WeChat and Alipay currently dominate mobile payments in the country.”

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