China smartphone Archives

Q3 2023 China Smartphone Sales Fall 3% Signaling Recovery Getting Closer

In Q3 2023, smartphone sales in China declined 3% YoY in a sign the market could be closer to bottoming out.
Huawei was the big winner, growing 37% YoY on the back of the newly launched Mate 60 series, which is powered by its SoC Kirin 9000S.
Major OEMs’ performance varied significantly YoY, which resulted in market ranking changes. HONOR took the top spot as vivo and OPPO lost significant ground.
Apple lost share in Q3 2023 as some demand was fulfilled in Q1 and Q2 and because the iPhone 15’s launch sales volume was lower than that of the iPhone 14 series.

Beijing, New Delhi, Hong Kong, London, San Diego, Buenos Aires, Seoul – October 26, 2023

In a sign China’s smartphone market may be closer to bottoming out, its sales fell 3% YoY in Q3 2023, narrowing the YoY decline sequentially, according to Counterpoint’s Market Pulse Service. Major OEMs’ performance varied significantly compared to the same period last year, which resulted in market ranking changes. HONOR took the top spot even as vivo and OPPO lost significant ground.

China Smartphone Market Sales Share, Q3 2022 vs Q3 2023

Source: Counterpoint Market Pulse Service

Notes: OPPO includes OnePlus; Xiaomi includes Redmi; vivo includes iQOO; Figures may not add up to 100% due to rounding.

During Q3 2023, the performance of most leading OEMs except Huawei was lackluster. On the back of the Kirin SoC’s return, Huawei launched the Mate 60 Pro suddenly at the end of August. It has made a huge splash in the market, contributing big to Huawei’s smartphone sales growth of 37% YoY in Q3 2023. Commenting on Huawei’s performance, Senior Analyst Ivan Lam said, “Although the Mate 60’s sales are under the Pioneer Program and mostly carried out through the brand’s offline and online channels, the product has quickly garnered massive attention. Huawei is striving to ramp up production to catch up with the demand.”

HONOR led the market with an 18.3% share largely driven by the newly launched HONOR X50 and HONOR 90. Xiaomi increased YoY on the back of strong sales of the Redmi K and Note series driven by competitive promotional prices. On the slight increase in these two brands’ market share, Research Analyst Alicia Gong said, “Both HONOR and Xiaomi are focusing on offering more affordable mid-range products with promotional prices to both retailers and consumers to offset any potential downward pressure. This strategy has proven to be effective.”

OPPO, vivo and Apple all experienced double-digit decreases in sales. Lam said, “iPhone sales declined as some demand for older models was fulfilled in Q1 and Q2 2023 due to earlier-than-expected price cuts by channels, which were not offset by the official price adjustment. This was compounded by initial supply constraints faced by the iPhone 15 series, which resulted in lower sales compared to the iPhone 14 series for the launch period. However, traditional offline dominators OPPO and vivo were impacted by weaker spending in Tier 2 and lower cities, as well as being slightly less aggressive in promotions than HONOR and Xiaomi.”

During the quarter, sales of foldable smartphone models continued to grow. The OPPO Find N2 Flip remained the top-selling clamshell-type foldable, while the HONOR Magic V2 ranked first among book-type models. As we enter Q4, all OEMs are gearing up to improve overall performance and end the year with strong sales.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

China Smartphone Sales Fall 5% YoY in Q1 2023; Apple on Top With Highest Sales Share

Q1 2023 saw the lowest Q1 sales figure for China since 2014. However, the 5% fall marks an improvement from the double-digit YoY declines seen in previous quarters as the country emerges from COVID-19.
Despite the market downturn, Apple reached its highest Q1 share and sales in years. iPhone 14 series prices have been reduced at some channels since February.
On the other hand, sales of OEMs excluding Apple dropped 8% YoY as demand remained weak.
vivo and OPPO were competing closely for the #1 Android OEM in Q1. OnePlus sales increased over 200% after a high-profile return to the Chinese market.
Looking ahead, the YoY declines are expected to narrow in Q2 thanks to mid-to-high-end product launches and sales season promotions.

Beijing, New Delhi, Hong Kong, London, San Diego, Buenos Aires, Seoul – April 27, 2023

China’s smartphone sales fell 5% YoY in Q1 2023, reaching the lowest Q1 sales figure since 2014, according to Counterpoint’s Market Pulse Service. However, this was an improvement from the double-digit YoY declines seen in previous quarters as well as a sign of bottoming out. As the country emerged from the COVID-19 pandemic, Q1 sales increased by 10% QoQ.

The market saw a surge in sales in January during the Chinese New Year sales season due to the pent-up demand from the previous quarter and promotions offered by OEMs. However, sales momentum cooled down after the festive season, which also proved our prediction that consumers need more time to recover confidence. Though some premium Android models received support from customers, they were not enough to salvage the overall market downturn.

In Q1 2023, Apple recorded the biggest share in the China smartphone market, increasing sales by 6% YoY in a declining market. Apple’s market share in Q1 came to 19.9%, its highest Q1 share since 2014, while its sales were also the highest Q1 sales since 2015. Some retail channels cut prices of the iPhone 14 series by RMB 600-RMB 800 and some e-commerce websites offered additional RMB 800 subsidies. These moves quickly accelerated inventory turnover and helped Apple navigate the market downturn.

Sales of OEMs excluding Apple dropped 8% YoY, with major Android OEMs seeing YoY declines in the quarter as demand remained weak. Android OEMs were cautious in ramping up production. In terms of market share, OPPO and vivo were in a tie in Q1, with sales shares of 18.3% and 17.7%, respectively.

OnePlus’ fast growth in the China smartphone market after its high-profile return to the market was the spotlight of Q1. Its sales increased 227% YoY in Q1 with frequent and even aggressive launches of the OnePlus 11 and OnePlus Ace 2 and Ace 2V. These models sold well in the China online market where the value-for-money concept prevails. OPPO is sharing offline retail channel resources with OnePlus.

Source: Counterpoint Market Pulse Service Notes: OPPO includes OnePlus: Xiaomi includes Redmi; vivo includes iQOO; Figures may not add up to 100% due to rounding.

Huawei’s smartphone sales increased 41% YoY from a low base. Its mid-end Nova 10 series and premium Mate 50 series found popularity even though they still cannot support 5G. Huawei said that its product launch cycle had resumed to normal after US sanctions that were imposed more than three years ago.

With the eased pressure of smartphone manufacturing costs, OEMs have more room to improve specifications. For instance, we have seen OEMs offering bigger NAND and DRAM storage while keeping retail prices in check.

While the sales performance in the beginning of this year did brighten the mood, market players remain cautious about increasing production.

Despite this caution, we expect the market to further recover in Q2. China’s Q1 GDP increased by 4.5% YoY, beating expectations, while retail sales increased by 5.8%. These upbeat numbers suggest that the country’s household demand is picking up.

Q2 should be a busy season for Android OEMs, with several champion series in the $300-$500 price band set to be released in the market. This band is also the sweet spot for Chinese Android OEMs. The 618 online shopping festival in June is an important window to observe the second half of the year and gain visibility on the market outlook.

Background

Analyst Contacts

Archie Zhang

Mengmeng Zhang

Ethan Qi

Smartphone ODM/IDH Companies’ H1 2022 Shipments Declined 3% YoY Due to Economic Headwind

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Taipei, Seoul

September 2022

Smartphone shipments from ODM/IDH (Original Design Manufacture/ Independent Design House) companies declined 3% YoY in H1 2022, according to Counterpoint Research’s Global Smartphone ODM Tracker and Report, H1 2022. In contrast, global smartphone shipments fell even more sharply in H1 2022 due to the economic headwind, dropping 8% YoY. While the share of smartphone shipments from outsourced designs (from ODM/IDH companies) increased to 39% in H2 2022, up from 37% in H1 2021.

Global Smartphone Design Operation Status, H1 2022

Source: Counterpoint Research’s Global Smartphone ODM/IDH Tracker, H1 2022

Senior Research Analyst Ivan Lam said, “Downtrend in ODM/IDH companies’ shipments was driven by weak performance from OPPO, and Samsung, while the increased orders from vivo, TRANSSION and HONOR contributed offset to the decrease.”

Senior Research Analyst Shenghao Bai added, “The impact of inflation, rising food and energy prices in some regions is obvious, and personal consumption has weakened, consumers will tend to choose affordable products. OEMs are also struggling with cost pressure, it is possible to allocate more mid-to-low-end products to ODMs in the future. For example, ODM shipments’ proportion in vivo rose to 20% in H1 2022, after its first ODM-made device in H2 2021.”

Looking at the competitive landscape of the global smartphone ODM/IDH, Huaqin, Longcheer and Wingtech continued to dominate the market. The ‘Big 3’ now account for 75% of global ODM/IDH smartphone market, increasing from 70% in H1 2021.

Ranking, Growth of Global Smartphone ODM/IDH Vendors

Source: Counterpoint Research’s Global Smartphone ODM/IDH Tracker, H1 2022

Commenting on the leading ODMs’ performance, Ivan said, “Affected by the performance of Xiaomi and other companies, Huaqin’s shipments declined in H1 2022 but still accounted for the largest share among ODMs. At the same time, as of the launch of this research, Huaqin is vivo’s exclusive supplier, and with the other core customers recovering in the second half of the year, it is expected to see a good increase in shipments in H2 2022. Thanks to the breakthrough of cooperating with Samsung, Longcheer’s shipments increased sharply. Wingtech’s shipments slightly dropped YoY after it shifted its focus to the semiconductor and optical module sectors. In Tier 2, Tinno’s shipments rose driven by expansion through tie-ups with more OEMs. MobiWire saw a sharp increase after bagging Transsion’s projects.”

The diversification of manufacturing in the global electronics industry has continued. While smartphone OEMs are aggressively investing in India, EMS companies such as Foxconn, Pegatron, Compal and Wistron are expanding assembly lines to India, North America and Southeast Asia.

Commenting on these trends, Ivan said, “As OEMs that lean towards in-house manufacturing, such as OPPO and vivo, may shift production to their own facilities in India and Indonesia to satisfy local requirements. Following the EMSs, ODMs are also expanding their factories into India and Southeast Asia to better support the sales of key accounts and comply with policy barriers and mitigation of tariffs. We expect the expansion to regions outside of China to accelerate after COVID-19. However, one should be wary of limiting factors such as sub-optimal supply chain ecosystem and local policy risks.”

Counterpoint Research’s market-leading Global Smartphone ODM Tracker and Report service is available for subscribing clients.

Feel free to contact us at press@counterpointresearch.com for questions regarding our in-depth research and insights, or for press enquiries.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, USA, China and India.

Analyst Contact

Ivan Lam
ivan.lam@counterpointresearch.com

Shenghao Bai
shenghao.bai@counterpointresearch.com

Counterpoint Research
press@counterpointresearch.com

China Smartphone Sales Hit New Low in Q2 2022; HONOR Bucks the Trend, Doubles Sales

China’s smartphone sales hit a fresh low in Q2 2022 to reach less than half of the sales of the historical peak in Q4 2016. The last time the sales were lower than this point was nearly a decade ago in Q4 2012, when the iPhone 5 was introduced.
Capturing a 19.8% share, vivo retained its first place in Q2 2022, followed by HONOR (18.3%) and OPPO (17.9%).
Apple took the fourth position with a 15.5% share.
HONOR doubled its sales YoY and was the only major brand to show a YoY increase. realme’s sales dropped 44.3% YoY.

Beijing, New Delhi, Hong Kong, Seoul, London, San Diego, Buenos Aires – July 26, 2022

China’s smartphone sales decreased 14.2% YoY in Q2 2022, according to Counterpoint’s Market Pulse report. The quarter’s volumes were 12.6% lower than the level seen during the severe pandemic-hit Q1 2020, and less than half of the historical peak of Q4 2016. The last time the sales were lower than this point was nearly a decade ago in Q4 2012, when the iPhone 5 was introduced.

Commenting on the Chinese smartphone market’s performance, Senior Analyst Ivan Lam said, “China’s economy merely grew 0.4% YoY in Q2 2022, lower than the market expectation of 0.8%-1%. During this period, major cities across China, including financial and manufacturing hub Pan-Shanghai, went through full or partial lockdowns. The hardest hit was the services sector, which fell into contraction territory, from 4% YoY growth in the first quarter to 0.4% in the second quarter. The deepest decline occurred in April’s consumption data, with total retail sales of consumer goods falling 11.1% YoY. Weak consumer sentiment combined with the high smartphone penetration rate in China resulted in poor Q2 performance of smartphone sales.”

Lam added, “Smartphone sales rose during the 618 e-commerce promotion period and with the gradual lifting of lockdowns in major cities. However, the sales during this promotion period were still down around 10% YoY. Given the low sales volume number for Q2 2022, we expect smartphone sales to rebound in the next quarter. At the same time, with the demand continuing to be underwhelming due to weak consumer sentiment and lack of new innovations, it is going to be very hard to make the situation better in the second half when compared to last year.”

On key vendors’ performance, Research Analyst Mengmeng Zhang said, “During the quarter, vivo maintained its leadership. The mid-to-high-end S12 series helped vivo grab a good share in the $250-$399 segment. Sub-brand iQOO also received positive market feedback, especially from younger customers.”

Zhang added, “HONOR continues its great comeback by expanding its offline presence. With the lockdowns hitting major cities, HONOR’s coverage in lower-tier cities, which saw fewer lockdowns, helped the brand steer through the turbulence in Q2 2022. It may be noted that HONOR managed to take share from all the leading Chinese brands, including Huawei, during the quarter. It is time for OPPO and vivo, known as the “offline channel kings”, to take HONOR seriously.”

Apple still saw a comparatively good performance thanks to the shining sales of the iPhone 13 series in Q2 2022. Xiaomi saw a sales pick-up in June driven by the models like the Redmi K50 and Note 11 series. Research Analyst Archie Zhang said, “The increasing 5G penetration in China allows Xiaomi to tackle the shortage of 4G/LTE SoCs. But though its products can be seen on the shelves of more than 10,000 offline shops, Xiaomi is still grappling with sluggish sales.”

Despite the discouraging performance in Q2 2022, major Chinese OEMs continued efforts to strengthen their positions in the high-end segment. HONOR and Xiaomi have been benchmarking their high-end models against Apple by incorporating several iPhone features. OPPO and vivo are also leveraging their newly launched foldables to increase premium segment share. Commenting on the fast-growing new form factor, Lam said, “Major Chinese OEMs have not many options when it comes to penetrating the Apple-dominated premium segment. Foldable smartphone sales in the first half of 2022 have already surpassed that of 2021 with Huawei leading the segment, followed by Samsung and OPPO. We expect at least 4-5 new foldable models to be launched in the second half of 2022.”

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Ivan Lam

Mengmeng Zhang

Archie Zhang

Follow Counterpoint Research
press@counterpointresearch.com

China Smartphone Sales During 618 Fell 10% YoY Amid COVID-19, Slowdown

Beijing, Hong Kong, New Delhi, Seoul, London, San Diego, Buenos Aires – July 1, 2022

This year’s 618 e-commerce festival in China, which ran from May 31 to June 18, came amid gradual lifting of COVID-19 lockdowns in two of China’s largest cities. The e-commerce festival’s performance is an important indicator for predicting consumer sentiment in China. As was the case last year, TMALL chose not to reveal its 618 figures for 2022. The other e-commerce behemoth, JD, recorded a GMV of RMB 379.3 billion (~$56.6 billion), an increase of 10.3% compared to 2021. Nonetheless, this was the slowest growth ever for the 618 event.

Commenting on the smartphone segment’s performance during the 618 festival, Research Analyst Mengmeng Zhang said, “Discounts and promotions during the 618 period helped lift China’s smartphone market from its low in April and May. Smartphone sales during the first week of 618 (May 30-June 5) were up 32% compared to May 23-May 29. However, total smartphone sales during the 618 period were still down about 10% compared to last year, indicating that the overall consumer appetite for smartphones was hurt by the repeated COVID-19 waves and a slowing economy.”

Commenting on the key vendors’ performance, Associate Director Ethan Qi said, “HONOR surpassed vivo by a very slight margin to lead the market during this year’s 618 and was the only major OEM to register positive growth. Coming from a low base as well as a competitive portfolio covering a wide price band, HONOR posted an impressive growth of 148% during this period compared to last year. HONOR also utilized this e-commerce festival to successfully launch its latest HONOR 70 series, which immediately made it to the top 10 bestseller list.”

Note: OPPO includes OnePlus; Xiaomi includes Redmi; vivo includes iQOO

Source: Counterpoint Weekly Tracking Service

vivo and OPPO moved down one spot to the second and third spots respectively in terms of market share when compared to 2021. New offerings in the mid-tier segment, such as the Reno 8 and vivo S15, helped drive vivo and OPPO sales.

Xiaomi’s market share also declined this year, pulling the brand down to the fourth spot. As a traditional online brand, Xiaomi continues to invest heavily in e-commerce festivals and claimed to give out RMB 1 billion (~$0.15 billion) in subsidies for this year’s 618 event. Besides, Xiaomi’s online promotional activities are better aligned with its offline stores this year. Similar to vivo and OPPO, Xiaomi’s best sales contributor this year was a mid-end offering – Redmi K50. The Redmi K50 was one of the best value-for-money smartphones at the RMB 2,000 (~$300) price point, powered by the MediaTek 8100 chip, 2k display with 120Hz refresh rate and 5500 mAh battery capacity.

Apple ranked fifth while maintaining stable market share during this year’s 618. Despite a decline in sales from last year, Apple was the clear winner in the high-end segment during this year’s 618. Apple has nearly no competition in this segment after Huawei’s losses. The deep discounts offered by Apple also made the iPhone 13 series very attractive. Platforms gave out as much as RMB 1,000 off on select iPhone 13 models.

Pinduoduo is increasingly emerging as an important sales channel for smartphones. Continuing its RMB 10-billion (~$1.5-billion) joint subsidy campaign with brands and merchants, Pinduoduo saw its smartphone sales value increasing 148% YoY during the festive period.

Background

Analyst Contacts

Mengmeng Zhang

Ethan Qi

Ivan Lam

Tarun Pathak

Follow Counterpoint Research
press(at)counterpointresearch.com

China Smartphone Market $250-$399 Price Band Share Grows 10% YoY in Q1 2022, vivo Takes Top Spot

Beijing, Hong Kong, New Delhi, Seoul, London, San Jose, Buenos Aires – May 16, 2022

China’s smartphone market saw its $250-$399 (wholesale price) mid-to-high segment growing nearly 10% YoY in Q1 2022 to account for 25.5% of overall sales, a marked expansion from the segment’s 16.9% share just two years ago, according to Counterpoint Research’s China Handset Model Sales Tracker.

Leading smartphone brands have taken note of this by increasing the number of models to address the rising demand for features within the segment, which has been especially popular among consumers aged 24 and below.

Senior Analyst Ivan Lam said, “China’s Gen Z buyers are extremely savvy when shopping for smartphones and demand exceptional value. Leveraging online reviews and resources, this generation is making its renminbi punch above its weight, often comparing mid-to-high-end device features with more premium models. They are looking for solid CPU performance for activities like gaming, very good camera experience and great design.”

* Wholesale prices in $
Source: Counterpoint Research China Handset Model Sales Tracker, Q1 2022

The market shift is being driven by the following factors:

Continued growth of 5G: Our China Smartphone Market Pulse report shows 5G smartphone sales accounting for 75% of the overall sales last year, compared to 42% in 2020.
Upgrade cycles: Many consumers are replacing older 4G phones with 5G devices as they move up into the $250-$399 segment.
Post-COVID rules and regulations: Utility of smartphones has increased, especially with regard to vaccine certificates, testing procedures and quarantine rules.
Push from leading OEMs: To minimize the impact of shrinking margins at the low end, caused by shortages, especially of 4G SoCs and other mature node components, leading OEMs are nudging average selling prices (ASPs) higher.

* Wholesale prices in $
Source: Counterpoint Research China Handset Model Sales Tracker, Q1 2022

Research Analyst Archie Zhang said, “In the past, the big domestic players were marketing-driven, but what we are now seeing is a focus on advanced technologies and features. Marketing is obviously still an important piece, but vendors are now really looking to differentiate further at the hardware level too.”

Within the segment, vivo led the pack in the first quarter with a 28.2% share, according to Counterpoint’s China Handset Model Sales Tracker. Of the 145 models in the segment, vivo’s S12 came out on top, accounting for nearly 9% of total unit sales. Following closely behind were the Redmi K40, HONOR 60, OPPO A93s and Huawei’s Nova 9.

Competition is clearly intensifying at the upper end of the market with the balance of sales shifting from the under-$250 price band in Q1 2020 to the over-$250 band starting with Q4 2020.

Research Analyst Mengmeng Zhang said, “A good example of this market transition to higher-end devices is what is happening at vivo. The company has successfully shifted its X-series devices from the mid-high segment to position them as high-end flagships. This can be seen in the recent launches of the X80 series, X Note and, in particular, the X Fold. The S series has done very well as a replacement in the mid-to-high segment. And of course, we expect vivo to continue addressing the important sub-$250 segment with its popular Y-series devices.”

Background

Analyst Contacts:

Ivan Lam

Mengmeng Zhang

Archie Zhang

Follow Counterpoint Research
press(at)counterpointresearch.com

Apple Reaches its Highest Ever Market Share in China

Smartphone sales in China declined (9% YoY) for the third consecutive quarter in Q4 2021.
Full-year smartphone sales declined (2% YoY) for the fourth consecutive year in 2021
Apple surpassed vivo to become China’s #1 OEM for the first time since Q4 2015, capturing 23% market share, its highest ever.
realme was the fastest growing brand (83% YoY) in Q4 2021.
Four out of five smartphones sold in China in Q4 2021 were 5G capable.

Beijing, Seoul, Taipei, London, Boston, Toronto, New Delhi, Hong Kong – January 26, 2022

Apple surpassed vivo in Q4 2021 to become the #1 brand in China after six years, when the iPhone 6 supercycle was at its peak. Q4 2021 also brought Apple its highest ever market share in China at 23%, according to Counterpoint Research’s Monthly Market Pulse Service. However, China’s smartphone sales in Q4 2021 declined 2% QoQ and 9% YoY, respectively. The country’s full-year smartphone sales also continued the downward trend for the fourth consecutive year, declining 2% YoY in 2021.

Commenting on the overall Chinese smartphone market, Senior Analyst Ivan Lam said, “The market in China continues to decline due to various factors in both the supply side and the demand side. Firstly, the ongoing component shortages are impacting shipments of all OEMs. Secondly, China’s average smartphone replacement cycle is becoming longer. Smartphone designs within brands have also become more homogeneous, especially in hardware, failing to motivate consumers to upgrade. Lastly, China has been experiencing a complex economic environment where exports are driving the growth and domestic spending remains lackluster.”

However, in terms of OEMs, the competition has intensified after Huawei’s decline and the market dynamics are changing rapidly. OPPO was the top OEM in Q1 2021, followed by vivo in Q2 and Q3 and now Apple in Q4.

China Smartphone Market Share, Q4 2020 vs Q4 2021

*OPPO includes OnePlus Source: Counterpoint Research Market Pulse, January 2022

China Smartphone Market Share, CY 2020 vs CY2021

*OPPO includes OnePlus Source: Counterpoint Research Market Pulse, January 2022

Commenting on Apple’s performance, Research Analyst Mengmeng Zhang said, “Apple’s stellar performance was driven by a mix of its pricing strategy and gain from Huawei’s premium base. Apple rose to first place in China right after the iPhone 13 was released (week 39) in September. Afterwards, it remained in the leading position for most of the fourth quarter. The new iPhone 13 has led the success due to a relatively lower starting price at its release in China, as well as the new camera and 5G features. Furthermore, Huawei, Apple’s main competitor in the premium market, faced declining sales due to the ongoing US sanctions.”

vivo and OPPO took the second and third spots respectively, driven by their strong offline penetration and expansive product portfolio strategy. vivo’s performance was driven by the X70 series and S series, and OPPO took off with the Reno 7 series. HONOR also started rebounding in the second half of 2021 after restoring relationships with suppliers. It captured the fourth spot in Q4 2021. Facing more severe component shortages, slower penetration in offline channels as well as competition from HONOR, Xiaomi ranked fifth during the quarter.

The year gone by also proved to be a milestone in terms of Chinese OEMs embracing advanced technology. vivo, OPPO and Xiaomi all launched self-developed chipsets to showcase their investments in semiconductors. OPPO and HONOR also launched foldable flagship models, with more mature designs and highly customized software, especially for Chinese users. Foldables bring a new form factor to the smartphone design. As foldables become more affordable, they are likely to drive some users to upgrade.

Apple’s success in the premium segment is an encouraging sign and will continue to motivate Chinese OEMs to strengthen their footprints in the segment. We expect the smartphone ASP to continue to rise in China as leading OEMs put more effort into increasing it to counter the decline in sales.

Please reach out to press (at) counterpointresearch.com for press comments and enquiries.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, US, China and India.

Background

Analyst Contacts:

Ivan Lam

Mengmeng Zhang

Follow Counterpoint Research

Xiaomi’s Smartphone Strategy Under Scanner

Xiaomi’s numbers for the third quarter show the impact of the ongoing global component shortages on its balance sheet. Revenues grew just 0.5% YoY and plunged 19% QoQ, while quarterly sales growth was slowest in more than a year. All this has prompted many to question Xiaomi’s business strategies. But Xiaomi is already at work, picking areas for improvement and finding ways to tackle external factors.

Source: Counterpoint Research Smartphone Tracker

Xiaomi was the first OEM to bet big on combining internet characteristics with consumer electronics, especially e-commerce. The way the company built the connection between the brand and the consumer conveyed that it wanted to cut hardware and channel margins as much as possible. This was indeed a disruptive strategy for the market 10 years ago. Other OEMs in China were forced to adopt the same strategy. If we look at this 10-year period, this is how leading smartphone OEMs have survived:

Adopted the internet brand strategy, where online-centric brands were launched. Examples: Xiaomi, realme, OnePlus.
Adopted the internet brand strategy while leveraging the offline networks at the same time. Example: HONOR.
Continued the offline strategy while targeting a decent pie of internet sales at the same time. Examples: OPPO, vivo.

Xiaomi, with its strong value-for-money and predominantly below-$300 product portfolio, has grabbed a huge market share globally, especially in the past three years. This is due to two main reasons. First, Xiaomi has managed to take a big share from the local brands, which were mainly getting their supplies from Chinese ODMs and, therefore, lacking in pricing advantage and core competency in software. Second, the local OEMs are not in a position to match Xiaomi’s marketing muscle. Therefore, with the right kind of penetration strategy, it can be a very potent mass market alternative. But today, other players too are playing the same “internet brand” game as Xiaomi and are close behind.

Source: Counterpoint Research Smartphone Tracker

What has caused Xiaomi’s undulating performance in the past few quarters? Globally, Xiaomi experienced the ongoing SoC shortage, as was mentioned in its latest quarterly earnings call. Xiaomi’s main shipment contributors are 4G-enabled smartphones, especially those below $300. 4G SoCs also happen to be the ones facing the biggest shortage gap in smartphones.

In Xiaomi’s home country, China, it continued to struggle in the offline market. OPPO and vivo held more than 65% share in the offline market, while HONOR’s strong return meant a huge impact on Xiaomi. In Q2 2021, with the big e-commerce festival of “618”, Xiaomi beat expectations. But in Q3 2021, there was no such festival, which led to Xiaomi’s underperformance. Xiaomi has been working to overcome downsides:

It is working to ease component shortages, especially in SoCs.
It is trying to raise its ASP by targeting the mid-to-high segment.
It is doing offline channel mapping to better target the segment, though this segment takes time to produce results.

Xiaomi will perform much better in online sales in Q4 2021 when two big e-commerce festive sales of Singles’ Day (11.11) and Double 12 take place.

China Smartphone Internet Retail Sales Take 31% Share of Overall Market in H1 2021

Beijing, Hong Kong, Seoul, New Delhi, London, Buenos Aires, San Diego – September 8, 2021

China’s smartphone internet retail sales by units had a 31% share of the total market shipments in H1 2021, according to the latest Counterpoint Research data. For the full year, we estimate that the internet retail sales in 2021 will be slightly lower than 2020, while the revenue will increase. “From Q4 2020 to H1 2021, 5G-enabled smartphones flooded the market, including the Apple iPhone 12 series. But most of the target 5G users had already changed their phones. With the smartphone replacement cycle in China being 26-30 months, the market entered a near-saturation situation,” said Senior Research Analyst Ivan Lam.

Source: Counterpoint Research Report “China E-commerce Channel Smartphone Market Analysis, H1 2021”

China’s e-commerce marketplace is moving into a new era. Livestream sales have made rapid gains since H2 2020 in terms of viewership and continue to be very important to smartphone OEMs in 2021. Several CEOs have appeared in these live broadcasts to promote their smartphones and other products. Nowadays, a smartphone OEM in China needs to possess a trendy and comprehensive e-commerce channel strategy. Different types of online platforms have different target audiences. A customized product and pricing strategy is needed to push sales on these platforms.

China E-commerce Brand Matrix

Research Analyst Mengmeng Zhang said, “We estimate that the smartphone market in H2 2021 will still have higher sales than H1 2021 before moving to a flat or tiny uptrend in 2022. This means huge pressure on the leading smartphone OEMs to get their strategy right to retain or increase their share. With the right plan for internet retail, OEMs can yield twice the result with less effort.”

You can access Counterpoint Research’s latest report ‘China E-commerce Channel Smartphone Market Analysis, H1 2021’ here.

Our market-leading Market Pulse service for mobile handsets is available for subscribing clients.

Feel free to contact us at press(at)counterpointresearch.com for questions regarding our in-depth research and insights.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, USA, China and India.

Background:

Analyst Contacts:

Ivan Lam

Mengmeng Zhang

Counterpoint Research
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vivo: The Low-profile King of China Smartphone Market

People hardly notice any public statement by vivo’s top management on the company’s culture or an eye-catching social media post lashing out at other brands. But the fact is vivo has retained the top spot in China’s smartphone market since Q1 2021. According to Counterpoint Research’s data, the OEM had a 24% market share in Q1 and Q2 2021, up from 16% in Q1 2020. vivo was followed by OPPO at 21% and Xiaomi at 17% in Q2 2021.

OEM Market Shares in China by Quarter

China Smartphone Shipments of vivo by Quarter

Though all top OEMs have benefited from Huawei’s retreat, it is vivo that has managed to reach the top spot with its secured supplies of crucial components, optimized product portfolio, and a strong distribution network.

Remarkable component supply chain management

The COVID-19 pandemic has plunged the whole world into a chipset shortage which is not expected to end soon. Main chipset suppliers for mobile phones — Qualcomm, MediaTek and UNISOC — are seeing lengthening delivery lead times. As a result, they are only focusing on key accounts and also increasing prices, the latest being UNISOC with its average 25% hike. But with the BBK group’s powerful supply chain, vivo can maintain a consistent supply of chipsets for its key volume segments — Y series and the newly launched S series. Within the Y series, there are 5G models available for as low as CNY 1,298 (~$200).

Optimized product portfolio

The newly launched S series of vivo is a liberator. Its focus on the CNY 2,000-CNY 3,500 segment means the X series is now free to focus on the CNY 3,500 and above segment. The Y series, with its focus on the CNY 1,999 and below band, remains a volume-driven product group. This clear categorization of smartphones has helped vivo’s performance in 2021. While retaining around 50% share in the CNY 1,999 and below segment with its Y series, vivo has managed to make a breakthrough with the S series and increased visibility in the CNY 3,500 and above segment with the X60 series. Other major Chinese brands have been aiming to have such product categorization and increase their ASPs (average selling prices), but their efforts in this direction are yet to see big results.

Channel distribution

Huawei’s woes have provided an opportunity for OPPO and vivo to grab more than 70% share in China’s offline channels. vivo has also gone in for a reorganization of its offline channel partners. The rising e-commerce sector has been hugely impacting both brands and offline channels. However, due to different levels of development in Chinese cities, there is still a big offline market. vivo has invested considerable resources in the offline segment, including in trade marketing, promoters, ATL and BTL synergy, and margin schemes.

iQOO: Designed for Generation Z

Although iQOO operates independently from vivo since its launch in 2019, it is still listed on vivo’s website as a series. Unlike OPPO, realme and OnePlus, iQOO is heavily focusing on the online segment. The consumer group it is eyeing here is those born in 1995 and beyond. These are the people who have been exposed to the internet, social media and mobile phones from their earliest youth.

iQOO has been the sponsor for ‘Honor of Kings – KPL’, an e-sport competition, since 2019. As the hottest smartphone e-sport competition in China, it has been attracting millions of viewers every season. In fact, the vivo family (vivo and iQOO) has been its sponsor since the beginning of this game back in 2016.

Fierce competition

On August 12, 2021, HONOR unveiled its flagship Magic 3 series, aimed at capturing the space vacated by the Huawei Mate and P series. However, its high prices have left many unimpressed. To Chinese consumers, a smartphone above CNY 4,000 is a segment reserved for a few, like Apple’s iPhone, Samsung’s S and Note series, and Huawei’s Mate and P series. This is because these brands have invested a lot over the years in promoting their flagship models as high-end phones with cutting-edge technology and innovation. As we know, vivo has a series called NEX which is high on innovation, just like Xiaomi’s Mix series. Maybe vivo can use this series to target the high-end segment.

With HONOR pushing ahead with its comeback and Xiaomi’s focus on the offline channels, the Chinese smartphone market will see fierce competition between vivo, OPPO, Xiaomi, HONOR, Apple and keen-to-be-back Samsung in the coming days.

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Insights Tag： China smartphone

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Remarkable component supply chain management

Optimized product portfolio

Channel distribution

iQOO: Designed for Generation Z

Fierce competition

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