Smartphone shipments in China dip to lowest level since 2013

Huawei dominated the Chinese smartphone market in 2018, while Apple and Xiaomi declined.
Written by Cyrus Lee, Contributor

Total shipments of smartphones in the Chinese market, which is world's largest followed by India and the US, dipped to its lowest level since 2013 as only 396 million units were sold in the country, down 14 percent from the previous year.

It was also the second year-on-year decline seen in the country after the 4 percent decline registered in the previous year, according to a Canalys report released this week. After robust growth in the market between 2010 and 2013, the pace of expansion has slowed down in recent years.

The natural slowdown from consumers keeping their smartphones for longer is one factor, but the slowdown has been amplified considerably due to China's economic slowdown and the weakened purchasing power of consumers, Canalys said in a press release.

The decline is expected to continue in 2019 as the research firm expects Chinese overall phone shipments to fall another 3 percent to 385 million this year.

Among the top five smartphone brands in China, only Huawei and Vivo -- who are ranked first and third in the market in 2018 -- reported growth during the past year, up 16 percent and nine percent respectively.

Oppo, Xiaomi, and Apple -- the second, fourth, and fifth largest vendor in China -- reported two, six, and 13 percent declines respectively in handset shipments for 2018.

The top five brands now own a combined share of 88 percent in China, a notable improvement from 73 percent in 2017, suggesting that smaller vendors are being squeezed out of the market.

Canalys has singled out Huawei, the leading Chinese smartphone brand, indicating that it had achieved record market share of 27 percent in 2018 with 105 million shipments. 

"China continues to be a strong foundation for Huawei and its launchpad for overseas expansion as Huawei aims to challenge Samsung for global leadership in 2019," said Mo Jia, an analyst of Canalys in Shanghai. 

Jia also added that its two-brand strategy of owning both Huawei and Honor phones has allowed the company to cover a wider range of price points.

In an earlier interview this month, Huawei's consumer business leader Richard You said Huawei expects to outstrip Samsung to become the world's number one smartphone vendor by the end of 2020, after successfully overtaking Apple in the second quarter of 2018 to seize second place in the global market.

Meanwhile, Canalys pointed out that Xiaomi failed to expand in China despite rapid development outside of its home country. According to the firm, the Chinese company will need a clear position for its two brands, Xiaomi and Redmi, after it decided to split Redmi's budget phone offerings into a separate brand to help its main Xiaomi brand target higher selling prices.

Apple, the only non-Chinese brand among the top vendors, was the worst performer last year with shipments falling 13 percent as its high pricing strategy scared away consumers in the country, said Canalys.

Apple plans to cut the price of certain iPhone models outside the US market to counteract the stronger US dollar increasing the price differences. These cuts are targeted towards certain emerging markets where the local currency dropped against the US dollar in the past year, Apple CEO Tim Cook said on Tuesday, according to Reuters.

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