China, the world’s largest smartphone market, saw shipment volumes fall 4.3 per cent in Q1 to 98.8 million units, the first time in six years that the market has declined year-on-year.
And the market was down 8 per cent compared to Q4, according to IDC.
“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.”
Source: IDC Asia/Pacific Quarterly Mobile Phone Tracker, May 2015 (click to enlarge)
Apple consolidated its position at the top, with unit growth expanding 62 per cent during the quarter and its market share jumping from 8.7 per cent to 14.7 per cent.
Xiaomi slipped to second despite a 42 per cent increase in shipments. Its market share rose from 9.2 per cent a year ago to 13.7 per cent. Huawei held on to third place, with shipments up 40 per cent and its market share rising to 11.4 per cent from 7.8 per cent a year ago.
Samsung was the biggest loser, falling from first a year ago to fourth. Shipment unit growth declined 53 per cent and its market share plummeted from 19.9 per cent in Q1 2014 to 9.7 per cent in the last quarter. Lenovo was fifth with a 8.3 per cent share, down from 10.2 per cent a year ago. Year-on-year shipment units fell 22 per cent during the quarter.
Conflicting analyst reports
Data from Strategy Analytics last month, however, claimed China’s smartphone shipments increased 17.3 per cent to 110 million units in Q1 compared to a year ago, with Xiaomi narrowly maintaining the top position over number two Apple.
IDC is forecasting relatively flat growth in China this year. As prices fall the research firm expects vendors to move into higher-price tiers. Notably, Huawei, Lenovo and Xiaomi are trying to push into the mid-range and high-end segments.
With reduced operator subsidies, IDC said smartphone makers are moving away from traditional operator channels and targeting vendor-branded retail shops, direct online sales and e-tailers. In particular, they are trying to reduce the expenses associated with traditional dealers/distributors.
To successfully combat local players overseas, Chinese vendors will need to focus on channel relationships and localised marketing strategies, said Tay Xiaohan, senior market analyst with IDC Asia/Pacific. “Most of the growth will come from sub-$150 phones as feature phone users switch to low-cost smartphones.”
With China slowing, domestic vendors will also focus on increasing their presence in India as well as more Southeast Asia countries, IDC said.