China smartphone market hit a snag in Q4

31 Jan 2019

Strategy Analytics’ latest report, Smartphone Country Share Tracker (CST) service, showed China’s smartphone shipments tumbling 11% in the last quarter of 2018 to reach 108 million units.

According to Neil Mawston, executive director of wireless device strategies at Strategy Analytics, the Q4 decline is in stark contrast to the 121 million units shipped in the same quarter in 2017. He attributes this drop to what he dubbed a recession in the smartphone market that saw five consecutive quarters of decline.

“The smartphone market is suffering from longer replacement cycles and weak consumer spending. The past year has been exceptionally tough and one the smartphone industry will want to forget,” he commented.

On the bright side, Huawei shipped 30 million smartphones capturing a record 28% share of the China market last quarter. With an annual growth of 23%, it is now the clear market leader added Mawston. He attributes this performance to “a strong product portfolio, famous brand and extensive retail channels.”

OPPO took the second spot with 21% share of the smartphone market in the aforementioned quarter. Despite a shipment drop of 2% annually, OPPO continues to grow faster than average. Huawei is piling pressure on OPPO in mid-tier and offline retail channels across major cities such as Shanghai. OPPO is trying to fight back, by targeting more online channels with improved models such as the K series.

In the third spot is VIVO 21% share and very close to overtaking OPPO. Vivo’s 8% annual growth rate is bettered only by Huawei. Vivo is growing online with the Z series, and launching more premium models from its NEX range that aim to differentiate by tech innovation said Strategy Analytics.

Apple isn’t doing too well in China lately. While it performed better than Xiaomi, overtaking the local brand with 10% smartphone market share in China in Q4 2018, iPhone shipments dropped 22% annually – the worst quarter for the American icon since early 2017. Apple iPhone sales have now fallen for 8 of the past 12 quarters. Mawston says Apple is in danger of pricing the iPhone out of China.

On January 2, 2019, Apple CEO Tim Cook wrote to investors revising downward the company’s revenue guidance for its first fiscal quarter to $84 billion from $93 billion blaming the iPhone’s soft performance squarely on China. He attributes a weaker-than-expected Chinese economy and the ongoing trade problems with the US as mitigating factors.

Xiaomi rounded the top 5 with 9% share of the market in Q4 2018. Its previous strong growth in its home market has been halted slumping 35% annually. Xiaomi suffered from overstocked channel inventories, plus intensified competition from rivals Huawei and Vivo.

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