14 DAY TRIAL // China has been long viewed as a key developing market that was ready to absorb so much when it came to smartphones. But even if things looked promising and lofty not so long ago, decline has already started and is advancing at a fast pace.
According to a recent WSJ report, which rests on IDC findings, smartphone shipments in the country fell for the first time in six years, with a 4.3% year-on-year decline in the previous quarter.
Experts have tried to explain why the market has seemingly reached saturation levels. Smartphones have apparently reached a 90% penetration rate in China, meaning that just about anyone has a handset these days. This indicated that the first-time buyer has largely disappeared from the market, which transforms the country into a “replacement market.”
Out of the most renowned smartphone vendors, Samsung, seems to have fallen from grace in China, managing to occupy only the number 4 position in the Chinese best-selling brand top.
Apple is the king of smartphone sales in China
Apple, on the other hand, is doing quite well, currently grasping a 26% marketshare in the country. What’s more, the report says that the Cupertino tech giant is actually selling more phones in the Chinese market than it is in the US.
It’s interesting to note that even local gurus like Xiaomi are finding it increasingly hard to compete in the country.
But despite the slowdown, Chinese manufacturers aren't taking things easier. Companies like Huawei, LTE, Xiaomi and Lenovo have all launched new models this year and they have plenty others in the pipeline.
The thing is, device makers will now have to focus on convincing customers to upgrade their phones as often as possible. But for some users, the renewal cycle takes longer than what some phone makers would want to.
For example, some users will only purchase a new phone once the device has deteriorated to a state where it can no longer be used or if it gets extremely slow.
Budget phone makers are also having a hard time competing in China, as they often depend on the sales made through the country’s biggest state-controlled telecom providers. For example, the Coolpad Group Ltd. was China’s number 5 smartphone producer last year and its success rested solely on budget phones.
However, this year, the company lost its position. It also started spending more and focusing on premium products.
It seems that Chinese phone makers are facing tough times ahead. Will they be able to make it?