China’s Smartphone Market Contracts For First Time in Years

China’s Smartphone Market Contracts YoY For the First Time in Six Years

China Smartphone Shipments

Source: IDC Asia/Pacific Quarterly Mobile Phone Tracker, May 2015

China Smartphone Shipments and Growth

Source: IDC Asia/Pacific Quarterly Mobile Phone Tracker, May 2015

Singapore and Hong Kong, May 11, 2015 – IDC’s latest Mobile Phone Tracker shows the China smartphone market contracted by 4% year-on-year (YoY) with 98.8 million units shipped in the first quarter of 2015.  This is the first time in six years that the China smartphone market declined YoY as the market continues to mature. On a QoQ basis, the market contracted 8% on the back of a large inventory buildup at the end of last year.

“Smartphones are becoming increasingly saturated in China,” said Kitty Fok, Managing Director at IDC China. “China is oftentimes thought of as an emerging market but the reality is that the vast majority of phones sold in China today are smartphones, similar to other mature markets like the US, UK, Australia, and Japan. Just like these markets, 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.”

Apple was the top smartphone vendor in China in the first quarter of 2015, with consumers still having a strong appetite for the larger screens on the iPhone 6 and iPhone 6 Plus. Xiaomi slipped to the second position as it faced strong competition from other vendors in the low to mid-range segment of the market, while Huawei maintained third position as it saw a good uptake in the mid-range segment. Samsung and Lenovo both led the market at least once last year, but rankings have since changed quickly, highlighting the volatility of consumers’ brand preference in China.

IDC expects relatively flat growth for China in 2015.  Other trends to expect in China this year include:

  • Multi-brand strategies. Huawei and ZTE are positioning younger sub-brands Honor and nubia, respectively, to chip away at Xiaomi’s user base, and to attempt to gain a loyal fanbase. Lenovo is also getting into the mix with the Motorola acquisition, not to mention its upcoming online-focused Shenqi division.
  • Higher price tier competition. More vendors like Huawei, Lenovo, and even Xiaomi are trying to push higher into the mid to high-end segment.
  • Non-traditional channel strategies. Reduced operator subsidies mean that vendors will further expand channels into more vendor-branded retail shops, direct online sales, and eTailers instead. In particular, they are trying to save on the cost that they had to pay to the traditional dealers/distributors in the past.
  • Expansion into overseas markets. With the market in China slowing down, Chinese vendors will focus on increasing their presence in India as well as more Southeast Asia countries in 2015.

“To successfully combat local players overseas, Chinese vendors will need to focus on channel relationships and localized marketing strategies,” said Tay Xiaohan, Senior Market Analyst with IDC Asia/Pacific’s Client Devices team. “Most of the market’s growth will come from sub-US$150 phones as feature phone users switch to low-cost smartphones.”

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC’s Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 49 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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