The company said China shipped 100.6 million units, a year-on-year decline of 15.2% and a sequential fall of 2.9%.
While India overtook the US to become the second largest marketm, both countries were affected by weaker seasonal performances compared to 2017.
Seven of the top 10 markets recorded year-on-year declines, caused by growing replacement cycles, worse trading conditions and competition from major Chinese vendors.
Among the vendors, Samsung posted a year-on-year decline of 14%, which resulted in its market share falling from 22% in Q3 2017 to 20.4% a year later.
Huawei came in second, shipping 52 million units, with growth of 33% year-on-year. Apple followed, with 47 million units and growth of just 0.4%.
Xiaomi and OPPO were fourth and fifth, with 33 million and 31 million units shipped respectively. The Chinese vendors made up 52% of the worldwide shipments, the highest share they have recorded.
"China's market showed no improvement in terms of smartphone sell-in, and 14 of the top 20 brands in China declined in Q3," said Canalys Shanghai-based analyst Mo Jia.
"This has continued to put tremendous pressure on vendors amid rising component and labour costs in China. Chinese vendors are more focused than ever on overseas expansion in South Asia, Africa, and Central and Eastern Europe, to hedge against their business at home.
"But the current international trade environment and geopolitical issues are not great for business either. Only a few are likely to survive the tough winter."
The company said Greater China — including Hong Kong and Taiwan — was the worst performing region in Q3, down 14.6% annually. On the other hand, Central and Eastern Europe continued to be the top performer, growing 2.2% year-on-year, followed by Africa at 0.4%.
Graphics: courtesy Canalys