China Smartphone shipments fell 6% annually
The top five brands captured a record 92% share.
Beijing, Hong Kong, Seoul, San Diego, Buenos Aires, London, New Delhi – Oct 30th, 2019
Smartphone shipments in China fell 6% year-on-year (YoY) during Q3 2019, the fourth consecutive quarter of a YoY fall, according to the latest research from Counterpoint’s Market Monitor service. However, on a quarter-on-quarter (QoQ) basis, shipments grew 6%, driven by newer product launches and summer break promotions in China. The top five brands accounted for a record 92% of the market, the highest ever. For smaller and low-scale brands, the chances of survival are increasingly grim in China.
Commenting on the overall Chinese smartphone market, James Yan, Research Director at Counterpoint Research, said, “The Chinese smartphone market is becoming increasingly concentrated and difficult for smaller brands. Vertically-integrated OEMs are well-positioned to invest in R&D, innovate and consistently upgrade their offerings with prudent channel and marketing strategies to maintain or capture additional share. Even Apple is no exception. The better quality of devices, maturity of users and the weaker economic climate in China have slowed smartphone upgrade cycles. This makes it difficult for the world’s largest smartphone market to register positive growth in demand for the new smartphones this year.”
Talking about the onset of 5G in China, Research Analyst, MengMeng Zhang, highlighted, “The earlier than expected push for 5G network rollout in China, has resulted in 5G smartphones already going on sale during the quarter. Vivo, Huawei, ZTE and China Mobile took the lead with early releases and gaining some mindshare, but other players such as Xiaomi, OPPO, OnePlus, are also ready to roll out more 5G models through the end of this year. However, we expect minimal contribution from 5G phones to China’s overall smartphone market in 2019. But, 2020 will be a breakout year for 5G smartphone adoption in China and will likely rekindle smartphone demand.
Exhibit 1: China Smartphone OEM Shipments & Market Share – Q3 2019
Notes: Huawei (including Honor), Numbers are preliminary estimates.
Huawei (including the HONOR brand) leads the Chinese smartphone market with its market share growing to 40%, a record high. According to Counterpoint Research, Huawei’s total shipments in Q3 reached 41.5 million units. Of these, the high-end P30 series (P30+P30 Pro) accounted for around six million units. The shipments of Nova 5 pro exceeded three million units.
About Huawei’s performance, Flora Tang, Research Analyst at Counterpoint, added, “Since the trade ban by the US, Huawei aggressively increased its domestic sales strategy dedicating more resources to offset the decline from overseas markets. For example, the two brands (Huawei and HONOR) are deepening their channel relationships, promotions, and incentives across all the tiers of cities, and both online and offline. Since most of the services and applications within Huawei smartphones are highly localized, Chinese consumers are immune to the implications of the US ban. On the contrary, the ban has increased the sense of nationalism towards Huawei, increasing the brand’s mindshare and adoption domestically. In addition, the HONOR brand is also helping Huawei increase its market share in mid- to high-tier; the HONOR 9x performed well in the third quarter.”
Meanwhile, for Vivo, the X27, Y93, and Y3 series were the highlights in terms of contribution to sales. Further, the launch of 5G models from Vivo, and its sub-brand IQOO at aggressive price points helped it maintain the second spot in China. Together, OPPO and Vivo have cornered more than a third of the China smartphone market.
For OPPO, the A9 shipped nearly five million units in the third quarter, making it the best-selling model of the quarter according to our model sales tracker. James Yan said, “The A9 was followed by the Reno series, which shipped nearly four million units. The Reno series is in the early phases of building mindshare, with newer camera innovations and positioning in the minds of consumers against rivals such as Huawei and Vivo.”
Xiaomi sales continued to decline 38% YoY with the onslaught from Honor brand on one side, and Oppo A-series and Vivo Y-series on the other. However, Xiaomi’s inventory is in good condition. The Redmi K20 Pro series became the best-selling model with high-end specs and discounted prices, shipping more than a million units during the quarter. This was followed by the Xiaomi CC9 attracting the female segment, according to our Model Sales Tracker. We expect the September launch of the Redmi Note 8 series to drive some uptick during the fourth quarter.
Meanwhile, Apple‘s iPhone sales were down 14% YoY. However, Apple’s price corrections with iPhone 11 and XR as well as introducing a new palette of colors, have stimulated demand during the last week of September offsetting the sharp annual decline during July and August, according to our Monthly Market Pulse report.
Overall, China, the largest smartphone market in the world has become increasingly concentrated with the top three brands now controlling three-quarters of the market. This has led to consolidation and some exits for long-tail and mid-tier brands. With 5G around the corner, the market power will likely further concentrate towards two or three brands, increasing the barriers to entry, differentiation, and scale.
The comprehensive and in-depth Q3 2019 Market Monitor is available for subscribing clients. Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth, latest research, insights or press enquiries.
The Market Monitor research is based on sell-in (shipments) estimates based on vendor’s IR results, vendor polling triangulated with sell-through (sales), supply chain checks and secondary research.
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