In recent years, many companies have brought more focus to the Chinese smartphone market due to its possible infinite growth potential. Companies may experience some rough patches, but overall would see their market share and profits rise. Now, it appears that those days may be over.
IDC estimates that Chinese smartphone shipments declined 4.9 percent in 2017, showing the first drop ever since 2009 (via Financial Times). The firm pinned the reasoning on “minor upgrades” to Chinese phones have not enticed buyers enough to continuously upgrade and buy new devices. The market is also maturing. The rapid growth that market has experience in the past few years was sparked by Chinese middle class buying their first smartphones. Many of those who could afford to buy smartphones now have them, and aren’t always in a rush to upgrade when new devices are introduced into the market.
Even though this is a drop, companies aren’t necessarily complaining. The drop is mainly applied to smaller phone brands, whose shipments plunged 31 percent. The top five companies (Oppo, Vivo, Huawei, Xiaomi and Apple) have seen their numbers dip very slightly or seen them go up. Huawei, the biggest of the lot, saw its shipments rise nearly 19 percent, thanks to range of phones that covers from lower end all the way to high-end hardware. Xiaomi saw its shipments jump an astounding 32.6 percent, despite experiencing troubles in the past. Vivo has shifted away from low-end models in 2017, and as for Apple, the company’s premium range has seen real success in “tier 1” cities like Shanghai and Beijing.
It’s worth mentioning that top brands continued to see growth last year and dominated their respective areas. For example, Apple dominated the space of $600 and above, and Huawei experienced a 2 percent jump at the end of 2016 to 8 percent a year later in the same category. Despite seeing some growth, the question not becomes if these companies will be able to maintain growth for the long run. While targeting luxury buyers is good for business, there’s only a limited number of them. Majority of buyers care more about being able to afford devices and are always careful to budget when purchasing new devices.