China Smartphone Market Dips 6% In Q2; Huawei Tops Chart

The China smartphone market saw a dip in the Q2 of 2018 as the vendors shipped  105 million units, resulting in a 5.9% year-over-year (YoY) decline. During the same period a year back China shipped 111.4 million smartphones, the latest report from IDC said.

The report, Quarterly Smartphone Tracker, however said, the pace of decline has narrowed compared to 1Q18 as channel activity normalized and new products were marketed.

Among the smartphone vendors, Huawei saw a growth of 22% during the quarter and shipped a total of 28.5 million smartphones. Huawei continued to lead the China smartphone market in the second quarter with a 27.2% market share. Huawei cemented its position in the US$600 to <US$800 price segment with the P20 Pro series, while Apple moved to even higher price bands, helping Huawei build a high profile during the off-season. Moreover, its “GPU Turbo” technology resonated with users, while China’s 6.18 online promotions led to strong sales for Honor.

OPPO and vivo maintained their positions while optimizing their channels and releasing thin-bezel models, the OPPO Find X and vivo NEX. Marketing activities during the World Cup increased store traffic and interest for both brands.

Xiaomi maintained its value-for-money approach with dual-camera models priced at less than RMB 1,000 (~USD150). But its new models also helped increase the company’s average selling price (ASP) by 21% YoY, which is the highest among the top 5 vendors in China.

Apple fell YoY given that the high prices of its products kept it out of reach of many users. Nonetheless, the Apple brand name is still very strong in China, and we believe that the company will fare well should it release slightly cheaper options later in the year.

IDC China’s Senior Market Analyst Xi Wang said, “The market’s average selling price (ASP) increased 15% YoY in the second quarter. This suggests that consumers are willing to pay more for a phone targeted for their needs, including not just better cameras but also emerging categories such as gaming. Time spent on mobile phones continues to rise, and vendors should emphasize aspects like industrial design, quality, and brand image to drive replacements in this market.”

IDC believes that market leaders in China’s smartphone market will continue to gain more share, marginalizing smaller players in the process. Large vendors have been transforming from a single-channel and single-segment focus to a multi-channel and multi-segment focus. Their heavy investments here make it more difficult for a smaller player to compete.

IDC expects the China smartphone market to remain relatively flat in 2018, although exchange rates and trade wars are some factors that may impact the second half.

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