According to Counterpoint’s Market Monitor service, smartphones shipments in China grew 3% annually during Q2 2017 (Apr-Jun), the second consecutive quarter of annual growth.
Apple experienced a 0.3% drop to 8.2% and Samsung a 4% drop to 3%. While Apple’s drop is a result of anticipation of the iPhone 8 (Chinese lucky number) Samsung’s fall is more about the very late release of the Galaxy S8 and Plus delayed until 25 May and followed by severe stock shortages in June. These are special versions with the Qualcomm Snapdragon 835 and 6/128GB of RAM/storage.
Counterpoint Market Monitor research director James Yan said, “During Q2, the Chinese market showed a positive uptick in demand as well as supply. June seasonally is a strong month for China as it is usually buoyed by portfolio upgrades from major brands such as Huawei, OPPO, vivo and Xiaomi. These top four Chinese brands now capture 69% of the market and have raced ahead of international and other local brands with expansive distribution reach and exciting portfolio.”
The BBK-owned OPPO, vivo and OnePlus all increased marketshare on the back of their mass-mid-range phones providing close to flagship specifications for a lower cost. OPPO was number two at 18.8% and vivo number three at 17%. Between them 40% of the market was shared by the three brands.
Counterpoint associate director Tarun Pathak said, “OPPO and vivo grew significantly over last year with strong performance in the mass-mid-tier with A/Y series as well as with F/R and V/X series respectively in the mid-high-tier. Each of the series is well positioned in growth segments catering for demand from tier-1 cities to tier-4 towns.”
But it is not all roses – a 3% growth year-on-year means that, “We are nearing the time where the days of easy growth are over for Huawei, OPPO, vivo and Xiaomi in China. The competitive landscape is converging as all the top four Chinese brands have reached a steady and dominant position in a very slow growing market. The race for the top two spots is always up for grabs as one misstep can push a brand easily two spots behind,” said Counterpoint industry analyst Neil Shah.
He was referring to the comeback of Xiaomi from the declining spiral.
An interesting figure is the “Other” makers at 19.8% (down from 27.2% year-on-year). BBK-owned One Plus commands about 4.2% and the other significant player is Lenovo with its Motorola, Zuk and Lenovo brands.
Lenovo has stated that it wants to be at least the number two brand in China and number three brand globally. It will focus its smartphone business on the Motorola brand. “To do this we must make Motorola for everyone and we will do it by offering Pure Android, models addressing the whole market, and supply the quality and reliability our brand has been built on,” Sridhar Ramaswamy, director of Marketing Asia Pacific, said in June.
BBK appears to be following HP’s lead in an extraordinary turnaround over the past few years. HP chief executive Dion Weilser has said, “The real trick in this business is to segment the market, segment again, and when you've done that do it one more time. Figure out where the pockets of growth are going to be, where the heat map is going to take you.”
First off the rank is OPPO that has focused quality and value products for export markets like Australia as well as Chinese Tier one and two cities. Next is vivo, that is producing value-packed phones and covering markets like India as well as tier three and four Chinese cities. OnePlus is the maverick, offering experimental designs and selling far and wide to enthusiasts. Between them they have 40% of the Chinese market, are in the top five in every country they export to, and occupy number two rank among smartphone makers, shipping 56.7 million smartphones in Q1, 2017, just behind Samsung.