Low-Cost Devices Fuel China's Smartphone Market as iPhone Sales Dip

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In China, low-cost smartphones have brought an overall uptick in sales in the second quarter of 2016, while high-end devices -- from companies like Apple and Samsung -- continue to face declining sales numbers in the country (via DigiTimes). Local vendors in China are said to be "focused on promoting entry-level and mid-range 4G models," instead of trying to convince the Chinese public that Apple or Samsung's smartphones are worth the higher price points.

Specifically, smartphone shipments totaled 149 million units in Q2 2016, increasing 2.7 percent from Q1 2016 and 14.3 percent from the year-ago quarter. This surge comes from China's top-selling smartphone companies (in order of smartphone market share in China): Huawei (14 percent), Oppo (12.7 percent), Vivo (11.2 percent), and Xiaomi (10.4 percent). Apple comes in fifth place, "with its market share falling into a single-digit range," although the specific number wasn't disclosed.

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Sales of high-end models from Apple and Samsung Electronics continued to suffer declines in the second quarter as local smartphone vendors focused on promoting entry-level and mid-range 4G models capitalizing on subsidies offered by the top-three telecom operators, Digitimes Research noted.

The double-digit shipment growth rates enjoyed by China-based smartphone vendors in the first two quarters of 2016 were higher than the growth rates of smartphones shipped to consumers from retail channel operators, resulting in an increasing pile-up of inventories at channels.

As it was reported earlier in the summer, low-cost devices that are available to a wide range of users who have yet to purchase a smartphone are helping to contribute to an overall growth in the worldwide market. Apple still faces some issues in the Greater China market, reporting an 11 percent revenue drop in mainland China in April, in the same earnings call that confirmed the company's first year-over-year revenue decline since 2003.

In the same call, CEO Tim Cook remained "optimistic" about Apple's presence in China, saying that "China is not as weak as has been talked about. We may not have the wind at our backs that we once did, but it's more stable than the common view of it." Despite some hindrances placed on Apple services like iTunes and iBooks in the country, not to mention Apple's occasional scuffle with Chinese regulators, China remains Apple's third-most profitable market behind the United States and Europe.

Tag: China

Top Rated Comments

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54 months ago

Local vendors in China are said to be "focused on promoting entry-level and mid-range 4G models," instead of trying to convince the Chinese public that Apple or Samsung's smartphones are worth the higher price points.

I suppose that if the less expensive models are meeting the needs and desires of the consumer public in China then that would explain the lack of sales on the Apple and Samsung phones.
Score: 8 Votes (Like | Disagree)
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54 months ago
Regardless of the market, there will always be more people buying the cheapest product than people buying the most expensive. The issue for the expensive side is to convince consumers that spending the extra dollars is worth it because of x or y. On the cheaper end the issue is to convince the consumer that the cheap product is good enough. Until apple shows up with something to again pull away from the pack the cheap phone "message" is making more sense. Apple dropping its price is not the answer. You cannot compete and make any profit on cheap. The answer is for Apple to announce products that provides sufficient differentiation to justify the cost.
Score: 7 Votes (Like | Disagree)
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54 months ago
The only solution is drop the price :apple:
Score: 5 Votes (Like | Disagree)
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54 months ago
From what I've read most Chinese smartphone users spend a lot of time within Wechat. The app does things that other messenger apps are just starting to do: hail cabs, shop online, transfer money, buy movie tickets, pay your bills, and lots more. I'm guessing that for most Chinese a mid-level android phone is good enough since you can run Wechat on any phone/OS.
Score: 3 Votes (Like | Disagree)
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54 months ago
Look around. Even here in the US, we are seeing great 5" and larger phones that are actually pretty decent for as low as $69. Even a really good, high-spec phone is $200. Times are changing and with people wanting new hardware more frequently, does it make sense to drop $1000 on a phone? Does everyone need a 12-core monster phone with every feature imaginable?

The fact that manufacturers can sell a full-featured, usable smartphone for less than $200 is a sign of even more less expensive choices down the road.

Except for ones with an Apple logo on it.
Score: 2 Votes (Like | Disagree)
Avatar
54 months ago

To the hell with units sales!

Most of those smartphones are under $150 and $100.

Who cares about unit sales?

Apple has their own stores, so 3rd party retailers can stop stocking iPhones, that's no problem for Apple. But they won't, because retail margin on iPhones are quite considerable.

Developers know that iPhone users are the most engaged users in the market, more likely to hail a ride, or buy digital goods, the AppStore is #1 world wide, so software is not going anywhere.

So what's really the point of unit sales and this stupid "Apple vs World, and World decides the rules" war?

Apple might be losing sales because lots of people upgraded from 2 year and 1 year iPhones to the 6 promptly and now don't see a reason to upgrade and the second hand market was flooded with 5's and 5s's. The rethoric that Apple is losing sales because of smartphone quality vs the competition is ridiculous. In 2015 there were the same quality phones for low prices and in 2014 the same was also true.

Also, those numbers are false, Kantar reports 17.9% for iOS in China. So one is lying. I would say Digitimes source is lying. Either the data is trustworthy or it's not. And it's not.

You can stop your BS all together.

2 year contract is not thing in China. Most people buy unlocked phone. Most people don't sign into 2 years contract.

You try to abolish carrier subsidy for iPhone. You will see iPhone sale down to the toilet. This is exactly what happen in Chinese and Indian market.

All the list of thing you listed aren't really applicable to Chinese market. China has its own thing, where people are not locked into Apple's ecosystem. Chinese people has its way to finding apps, music. Apple Stores in China are still not common place in China. People aren't use Apple's services. iOS still lacking some basic features that offered in mosy Chinesr phone makers.

You know nothing about Chinese market. All you know is that Apple is awesome in west, same logic must apply to China.


Huawei, Oppo, Meizu and Xiaomi are abousltly killing Apple.

It does not really matter Apple's market share is one digit or two digits. The fact is Apple's share in China is dropping and dropping realtive fast.
Score: 2 Votes (Like | Disagree)

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