• China's weekly smartphone sales posted consecutive YoY declines from Week 5 to Week 11, after a temporary spike before the Spring Festival.

• The national subsidy program seems inadequate to generate sustained follow-up demand.

• Lingering economic concerns continue to curb Chinese consumers’ enthusiasm for smartphone purchases.

• Market revival will require product innovations rather than just financial incentives.

• The market is likely to see a demand rebound with new product releases by major OEMs.

After a temporary spike before the Spring Festival, China’s weekly smartphone sales posted consecutive YoY declines from Week 5 to Week 11, with cumulative sales dropping 5% YoY, according to Counterpoint’s China Weekly Sell-through Tracker. Though the national subsidy program helped mitigate the market’s downward trend during its inaugural week, it failed to generate sustained follow-up demand.

Also, the escalation of US tariff policies had a negative impact on China, whose economy relies heavily on manufacturing and exports. These concerns about the economic future have suppressed Chinese consumers’ demand and appetite for purchasing consumer electronic products. Without the boost driven by subsidies, the decline could have been even more severe.

To further stimulate domestic consumption, China’s government expanded the subsidy program in March to include smartphones priced above CNY 6,000. Under this program, select channels provide a 10% discount (capped at CNY 1,000 per device).

However, we believe market revival will require product innovations rather than just financial incentives. AI-powered smartphones hold significant potential to reignite market excitement, but as of now, consumers only perceive marginal enhancements in their daily experiences. This situation is likely to improve over the coming year.

The smartphone market is now in its slow season, especially from late February to April, when most newly released products have already been in the market for nearly six months or longer, and their initial appeal has faded. On the other hand, new model launches see subdued activity during the period. Even with the national subsidy, which can be utilized only once, consumers still prefer to wait and assess upcoming new product releases before deciding whether to upgrade their phones. With major OEMs launching new models in April, we expect the market to see a demand rebound.

Nevertheless, the recent escalation of US tariffs has intensified bilateral tensions, prompting a reassessment of supply-demand dynamics and rising manufacturing costs. This may trigger macroeconomic volatility, potentially reshaping global and Chinese domestic consumption patterns. Meanwhile, China’s accelerated “internal circulation” strategy to boost domestic demand aims to counterbalance production pressures, though cautious monitoring remains crucial given its indirect impact on demand-side adjustments.