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Smartphone shipments in China decline for the first time in six years

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smartphone-collectionFor years now China has been one of the main drivers of growth in the global smartphone market, but it looks like demand in the country is beginning to slow down. For the first time in six years, smartphone shipments in China declined year-on-year, contracting by 4 percent to 98.8 million units in the first quarter of 2015. This represents a fall of 8 percent compared to the previous quarter, reports US market researcher IDC, although the firm notes that this is partly due to large amounts of unsold inventory left over from the end of 2014.

Despite the perception of China as an emerging market for smartphones, the country is now broadly comparable to nations such as the US and UK, says IDC China’s managing director Kitty Fok. “Just like these markets, convincing existing users as well as feature phone users to upgrade to new smartphones will now be the key to further growth,” said Fok in a statement. “Smartphones are becoming increasingly saturated in China.”

As with the US in previous years, this seems to have put Apple in a favorable position, with the iPhone maker emerging as China’s top vendor in the first quarter of 2015, shipping 14.7 percent of new devices or 14.5 million units. IDC says this is thanks to continuing demand for the iPhone 6 and 6 Plus, but Apple’s reputation in China as a luxury brand (it’s more popular than the likes of Gucci, Chanel, and Dior) might also be a factor. If consumers already have all the practical benefits of owning a smartphone, then brand prestige is needed to tempt them to upgrade. It should be noted as well that, although IDC reports Apple as China’s number one vendor in the last quarter, rival market research firm IHS put Xiaomi in first place — something the smartphone maker was quick to trumpet on social media.

A mature market does not mean a stable one, however. Over the past year, Samsung and Lenovo both took turns leading the Chinese market in terms of devices shipped, but landed in fourth and fifth place in the first quarter of 2015. Similarly, while Xiaomi and Huawei took second and third place in this most recent quarter thanks in part to their strategy of selling low and mid-range devices at slim margins, IDC notes that these vendors are likely to “push higher into the mid to high-end segment.” Meanwhile, other vendors are experimenting with tactics such as direct online sales that save on distributor costs and new “sub-brands” to attract younger users. China’s demand for smartphones may be slowing but the market itself is still very much open to change.


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