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