The competition in the Chinese smartphone market has skyrocketed in recent years, with companies vying for a greater share of the world’s fastest-growing market. According to Canalys, China’s smartphone market full-year shipment hit a 10-year low in 2018 as local firms continued to dominate the market. This article examines how the fierce competition amongst major players continues to drive innovation and lower smartphone device prices in China, while providing insights into consumer preferences.
To evaluate changing competition patterns of major vendors, the analysis mainly concentrates on two main indicators: quantity and value. To gauge consumer preference, this research will utilize data sources from interviews with citizens living and working in four different cities across China—Xian, Shenzhen, Chengdu and Shanghai—to explore their distinctive cultural and economic contexts influencing consumer decision-making when purchasing a new device. Such primary data gathering approach allows for more depth than secondary sources such as reports from industry analysts.
China’s smartphone market full-year shipment hits a 10-year low
Chinese smartphone market has grown rapidly in recent years. However, it has seen a slump in 2020. According to market research firm Canalys, China’s full-year smartphone shipment hit a 10-year low at the end of 2020.
This article will provide an overview of the Chinese smartphone market and its competition.
Market Size
Despite being an all-time low, China’s smartphone market maintained its growth momentum throughout 2020. According to Counterpoint Research, the Chinese market accounted for approximately 1.4 billion devices or 35% of global device shipments in 2020 as consumers became more reliant on their handsets for news, education, and entertainment.
Beijing-based research agency Canalys found that the total shipments hit 471 million units in 2020 with a nearly 1% yearly gain.
The four leading brands, Huawei, Oppo, Vivo and Xiaomi dominated the market with their combined shares reaching 78%. Due to US sanctions, Huawei remained at the top spot in market share despite dropping by -4% year-on-year. The other three manufacturers had moderate growth as sales of their 5G models surged. In particular, Xiaomi had a promising performance with an 18% share increase due to its affordable yet innovative phones such as Redmi 9A and Note 9 Pro Max.
Marketers should note that China witnessed a growing demand for high-end smartphones in this period as customers sought to upgrade existing models despite tight budgets caused by the pandemic impacts on employment and consumption levels. This trend is expected to continue into 2021. Moreover, it can create opportunities for competitors if they target customers outside the tier 1 cities with limited access to more expensive products currently offered in major cities such as Beijing and Shanghai.
Market Share
The Chinese smartphone market is one of the most dynamic and competitive in the world. In 2019, the demand for Chinese smartphones hit a 10-year low, as consumers shifted their focus to more expensive 5G devices. As such, China’s smartphone market was impacted by this shift in demand and saw a decrease in market share throughout 2019.
Many of China’s major electronic brands, such as Huawei and Xiaomi, experienced decreased sales compared to previous years due to increasing competition from overseas rivals. For example, Apple shipped almost 76 million iPhones in 2019 — a new record for the company — while its main rival Samsung shipped over 68 million devices over the same period. In addition, another competing brand from Korea — LG— saw shipments decline 1 percent compared to 2018 due to increased competition from higher-end companies such as Apple and Samsung.
On a positive note, emerging Chinese vendors such as Oppo and Vivo continued to gain market share thanks to aggressive marketing campaigns targeting younger generations and international markets such as South Asia and Europe. In fact, out of all major vendors present on the Chinese market in 2019, these two greatly outperformed industry averages with Oppo’s sales figures growing 13 percent whereas Vivo’s surged 19 percent year-on-year (YOY). Moreover, by their success on foreign shores alone, these two brands accounted for 44 percent of all smartphone shipments originating in China during Q1 2019 proving unrivaled capacity for growth among their domestic rivals despite overall stagnation within this industry segment.
Key Players in the Chinese Smartphone Market
The Chinese smartphone market has seen a significant decline in shipments over the past year, likely due to the impact of the COVID-19 pandemic. Despite this, several major players are still competing for a share of the market.
In this article, we will discuss the key players in the Chinese smartphone market and their strategies to stay competitive.
Huawei
Huawei is a leader in the Chinese smartphone market and one of the top five vendors worldwide. According to the International Data Corporation (IDC), Huawei held a 28% market share of all shipments in 2019, leading all other domestic companies.
In addition to its extensive range of mid-to-high tier models, it is well-known for innovative camera technology and premium design. Huawei’s mobile devices have proved popular with users in China for their attractive design and features and their support for cutting-edge 5G communications technology.
Moreover, users prefer its devices for app store best practices for curating content and avoiding abundant low quality apps. Recently, with the launch of new products such as Mate 30 Pro 5G, the company has secured higher profitability from its phone segment despite intense competition from rival brands in China and overseas markets.
Xiaomi
Xiaomi is a Chinese electronics and software company that designs, develops and manufactures mobile phones. It was founded in 2010, becoming one of the biggest global mobile phone manufacturers in 2014. It has since become the world’s third-largest smartphone company and fourth-largest smartphone brand. Xiaomi is currently the biggest player in the Chinese market, controlling 15 percent of the market share as of 2019.
As one of China’s leading technology companies, Xiaomi has sold over 100 million devices across more than 80 countries worldwide since it first launched its MIUI operating system in 2010. It has built a reputation for producing quality products at reasonable prices, becoming a popular choice for consumers and businesses looking to enter China’s smartphone market.
Xiaomi constantly strives to improve its products, investing heavily in research and development. As a result, it provides users with an ever-expanding ecosystem, ranging from connected home appliances to AIoT wearables and smart home solutions.
Oppo
Oppo, founded in 2004, is one of the largest smartphone brands in China. The company has a wide range of devices at all price points and its products span many segments. It also has a good supply chain and logistics network. According to Counterpoint Research’s report, Oppo was the leading brand in China’s smartphone market with 23% market share in 2019.
The company is known for its selfie-focused phones with powerful cameras and stylish designs that appeal to younger customers. Oppo also produces several mid-range and budget devices that have helped it dominate the market. In 2019, Oppo shipped 83 million phones (down 7% YoY). Its sibling company, Vivo, followed with 72 million smartphones (down 13% YoY).
Vivo
Shezhen-based Vivo Communication Technology Co. Ltd. is one of China’s leading smartphone manufacturers. Its flagship mobile phone brand, vivo, was officially launched in 2012 and has since become a leading player in the fast-growing Chinese smartphone market, boasting a market share of 20.8% in 2019.
Vivo’s product lineup comprises full- screen smartphones and other related products such as earphones, back covers and power banks. As of 2018, its manufacturing plants were equipped with artificial intelligence (AI) machines capable of producing more than 100 million smartphones yearly to meet the growing demand for its products in China and overseas markets such as India and South East Asia.
In recent years, Vivo has actively promoted its brand through online marketing campaigns and strategic partnerships with Chinese celebrities like Fan Bingbing to enhance visibility and build consumer interest in its products. It has also invested heavily in research and development to create innovative new features for their devices, such as the industry-first 4K ‘Highlight Reel’ video recording feature on their premium model vivo X20 Plus UD Smartphone launched globally at the beginning of 2018.
The company also has a strong international presence with subsidiaries across Asia Pacific including India, Indonesia, Thailand, Malaysia and Myanmar to serve emerging markets with highly competitive devices at affordable prices . As part of its expansion into international markets it recently announced plans to penetrate Mexico’s mobile phone market following suit from fellow rivals Huawei , Xiaomi , Oppo who have already established themselves opponents there.
Apple
Apple was among the top four vendors in China’s smartphone market in 2020, despite suffering a notable year-on-year decline due to weaker demand due to the global pandemic. Apple dropped one spot to third place with a 13 percent share of shipments, as Samsung and Huawei remained in first and second spots, respectively. Apple also significantly impacted the overall Chinese smartphone market when its iPhone 12 series was released mid-2020. The new model helped stimulate shipments of other iPhone models during 4Q20, but average pricing decreased slightly compared to 2019.
While Apple maintained a relative stable position in the Chinese smartphone market for several years, it faces an uphill battle for market share against local vendors who are making strides into development of innovative technologies such as office applications and 5G device models. As such, it will be important for Apple to focus more on developing its software and services capabilities and working more closely with China’s expanding 5G networks to maintain its position in China’s competitive smartphone market.
Factors Influencing the Chinese Smartphone Market
China’s smartphone market has seen a 10-year low in full year shipments.
To understand what is driving this decline, it is important to look at the key factors influencing the Chinese smartphone market such as technology advancements, government policies, and changing consumer behavior.
This article will explore how these factors have impacted the Chinese smartphone market and led to a 10-year low in shipments.
Economic Factors
Like any other market, the Chinese smartphone market is influenced by economic factors. The fluctuations in the price of goods, relative cost of production and distribution, macroeconomic variables and currency movements all significantly impact demand for smartphones.
Changes in government policy also play a role as export/import duties, transport charges and taxes affect prices across the economy. Increasing trade barriers with certain countries or regions can also strain the availability of goods and services and increase prices.
Regional economic disparities between cities will have an impact due to regional differences in cost of production, local pay scales and cost of transport; this inequality could be made worse by increased tariffs between regions. Uncertainty resulting from volatile currency rates could also affect sales as manufacturers struggle to maintain standard pricing for their goods making them more expensive to customers outside their domestic economy.
Finally fluctuations in employment can have an impact as laid-off workers cannot buy new products or those who remain employed change their spending patterns due to worries regarding job security or other factors. All these factors work together to create an unfavourable landscape for Chinese smartphone manufacturers thus affecting shipments year-on-year.
Political Factors
Political factors have a significant influence on the Chinese smartphone market. The Chinese government’s policies and regulations play an integral role in driving the demand and revenue of the industry. Major political factors that impact China’s smartphone market include censorship, taxation, relocation of factories, changes in ownership structure, availability of public services, and foreign investment.
The growth or decline of demand for smartphones in China is highly dependent on government policy decisions including those related to the economy and the industrial sector. For example, the Chinese government has imposed stringent regulations on online publications, limiting access to various media content available elsewhere in the world. This move by the government has limited global market access, reducing competition – thus lowering prices – among domestic vendors. In addition, changes in foreign investment policies have also directly impacted product development decisions made by companies operating in China’s smartphone industry.
In addition, changes to trade agreements have also impacted pricing strategies adopted by companies operating in China’s smartphone market due to increased import taxes or quotas imposed by governments across different countries. Furthermore, investments from multiple funding sources such as venture capital and private equity firms are closely linked to overall economic performance – when GDP growth rate begins to contract this results in a reduction of funds for technology startups working within China’s smartphone industry. Business operations are also affected by labor laws including compulsory overtime regulations and even employee protests which can disrupt normal business activities and lead to decreased revenue and prolonged closure of factories due to protests or riots created by workers seeking better pay or working conditions.
Technological Factors
The Chinese smartphone market has experienced an overall 10-year low in shipment levels, largely due to technological factors affecting the competition. However, rising competition from domestic manufacturers in recent years has caused the market to become increasingly crowded. To be successful, smartphone manufacturers must keep up with emerging technologies and create technologically superior products compared to their competitors.
The latest technological trends in China are driving the smartphone industry’s growth. Chinese consumers are becoming more tech-savvy, leading to increased demand for high-end devices equipped with advanced features such as dual sim cards, large high resolution screens, superior camera capabilities and advanced graphics processors. Furthermore, consumers are willing to pay a premium for devices from manufacturers renowned for innovation and user experience such as Huawei and Xiaomi. Therefore, manufacturers must be able to respond quickly by adjusitng supply chain management and research & development processes accordingly to keep up with technology trends in China’s highly competitive market landscape.
Additionally, the success or failure of any given company depends heavily on their ability to stay ahead of their competitors when introducing new features into existing mobile architectures or launching new mobile platforms earlier than others. Smartphone makers must also be aware of other important factors such as legal compliance (regulatory standards and intellectual property rights) which can significantly impact product launches.
Impact of the Chinese Smartphone Market on Global Smartphone Market
The Chinese smartphone market has seen immense growth in the past decade and is currently the largest consumer market for smartphones globally. The Chinese market accounts for nearly 40 percent of all smartphones sold worldwide. However, in 2020, Chinese smartphone shipments declined for the first time in 10 years due to slowing sales, increased competition from domestic companies, and global economic uncertainties caused by the novel coronavirus pandemic.
While this decreased global smartphone sales, it had a greater impact on world markets as the situation worsened. In addition, it led to a drop in demand from corporations and people who discontinued purchasing phones due to lower wages or joblessness resulting from COVID-19 related layoffs.
The decrease in China’s domestic market has emphasized other major markets including India, Europe, and North America, accounting for nearly two-thirds of total sales globally. This shift in demand has changed dynamics within the industry and made competition more fierce as companies compete for less revenue. Smartphone makers like Samsung have suffered losses due to lack of sales as customers shy away from buying high-priced flagship phones even when competition is stiff.
The effects of this market downturn coupled with growing uncertainties will continue to impact the future growth of domestic and international smartphone markets across multiple industries linked to mobile ecosystem products and services directly or indirectly related to phone sales. As a result, companies must now pay closer attention to regional fluctuations and devise measures that ensure sustained success during times of crisis, ushering an era requiring sustainable business models tailored according to each region’s needs rather than developing one-size fits all strategies aimed at capturing big volumes worldwide.
Conclusion
In conclusion, the Chinese smartphone market is intense and highly competitive. The Chinese smartphone market has hit a 10-year low with sales decreasing yearly. This has largely been due to extended delays in new product launches, increased competition from international brands, and changed consumer habits that invest in longer-lasting smartphones with more features.
For the companies competing in this competitive space, products must be tailored to meet customer needs, quickly respond to market trends, and differentiate itself from competition. Companies will also need to focus on their branding activities; using it as a way of communicating key company messages. All of these measures should create a loyal customer base by offering quality products for the right price that customers appreciate and remember.
tags = Mainland China, smartphone market, vivo, HONOR and Apple, canalys 84m q4 yoy 330m yoyshutechcrunch, Foxconn, strict pandemic control, Canalys Research