Friday, 27 April 2018 06:18

China smartphone shipments show dramatic fall in Q1 2018


Smartphone shipments in China have recorded their biggest decline, falling by more than 21% on an annual basis to 91 million units in the first quarter of 2018, with a sense of fatigue evident in the market.

Global technology market analyst firm Canalys said the 91 million figure was first passed in the final quarter of 2013.

In the first quarter this year, eight of the top 10 vendors recorded annual declines, with Gionee, Meizu and Samsung falling to less than half of their sales for the corresponding quarter in 2017.

Huawei, including its Honor brand, showed modest gains in the quarter, increasing shipments by 2%, retaining its lead and retaining its market share of about 24%. The company shipped 21 million units for the quarter.

Oppo and Vivo, second and third in the quarter, bore the brunt of the decline with shipments falling by about 10% to 18 million and 15 million units respectively.

canalys chinese smartphones

Xiaomi moved ahead of Apple to fourth place and was the sole company to show decent growth, with shipments rising 37% to 12 million units.

The top four — Huawei, Oppo, Vivo, and Xiaomi — accounted for more than 73% of the first quarter shipments.

“The level of competition has forced every vendor to imitate the others’ product portfolios and go-to-market strategies,” said Canalys research analyst Mo Jia.

“But the costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope.

"While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players."

china smartphone canalys

Xiaomi's showing was due, in part, to its lacklustre showing in 2017. “Xiaomi is the only vendor in the top 5 that is focused on the sub-RMB1000 (about US$160) price segment and it owes close to 90% of its shipments to Redmi. But the vendor is struggling to shed its low-cost image,” said Canalys research analyst Hattie He.

“The launch of the Mi Mix 2S in Paris and the very recent Mi 6X in Wuhan are clear efforts by the company to change customers’ perception of the brand, especially in China, where Xiaomi needs to tempt those looking at Honor, Oppo or Vivo to buy its products.”

Outside the top five, the total marketshare for vendors decreased from 34% in Q1 2017 to 19% a year later. Gionee was worst hit, with shipments down by about 70% to 1.6 million.

But Canalys said after two successive quarters of decline, growth was expected to return in Q2, as Oppo, Vivo and Huawei launched new flagship devices.

“The inventory issues that Oppo and Vivo suffered in Q4 and Q1 are now behind them,” said Jia. “New smartphones will definitely entice people to upgrade, but vendors are more careful of avoiding oversupply in the channel.

"China’s smartphone market may see a short period of stagnancy as vendors refocus on research and development, relying on new use cases to excite refreshes rather than spending heavily on the channel and marketing.”

Graphics: courtesy Canalys


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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