Top 3 Chinese Smartphone Vendors Grab Nearly Half of China's Market in 2016


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According to the latest IDC Quarterly Mobile Phone Tracker, the smartphone market in China saw a 19% YoY growth and 17% QoQ growth in 2016Q4. For the full year of 2016, the market grew by 9% with top Chinese smartphone vendors taking up a larger share of the market. The 4 Chinese vendors in the top five were the same in 2015, and their share grew from 46% in 2015 to 57% in 2016. This shows the growing local acceptance of Chinese vendors in its home country with the improvement in product features and better marketing messages seen in the past year. 

"Increased dependence on mobile apps has led to consumers to seek phone upgrades, thus helping drive the large growth in 2016Q4. In lower tiered cities, there was a similar demand by consumers, which OPPO and vivo met by aggressively pushing mid-range smartphones in these cities," says Tay Xiaohan, Senior Market Analyst with IDC Asia/Pacific's Client Devices team. 

2016 was the first time ever that Apple saw a YoY decline in the PRC market. Even though the new black colored iPhones caught the attention of consumers, overall, the new launches did not create as much of a frenzy compared to the past. Despite the decline, IDC does not believe Chinese vendors have actually eaten away Apple's market share. Most Apple users are expected to be holding out for the new iPhone that will be launched this year, and that will help the brand to see a growth in 2017. Apple's 10-year anniversary iPhone will also likely attract some of the high-end Android users in China to convert to an iPhone. 

A key trend that stood out in 2016 was the slowdown of the growth of the online channel in China. There is no longer a single channel that is seeing exponential growth for smartphones unlike previous years. Most brands are now using a combination of channels to increase their shipments. Xiaomi, previously focused on online channels, has opened more Mi Home stores to drive offline growth. Apple has also been aggressive in increasing its offline retail presence. Some vendors outside the top five vendor list in 2016, e.g. Gionee, also saw good growth in 2016 due to its expansion in the offline channel in the lower tiered cities. To differentiate itself from OPPO and vivo who predominantly target a younger audience, Gionee has been targeting professionals and executives, and hence found a niche market for itself to stand out against its two competitors. 

Here’s a quick view of what to expect from the China smartphone market in 2017: 

  • Top vendors will continue to take up a larger share of the market while smaller brands will begin consolidation. 360 stopped launching phones under the Dazen and Qiku brands in 2017, and this will happen for more brands in 2017. 
  • Chinese vendors will continue to focus on their international expansion plans. At present, out of the top three Chinese vendors in China, Huawei is the most successful with half of its shipments coming from markets outside China in 2016Q4. We expect these vendors to increase their shipments in the international market, with India as a key target for these top Chinese vendors. 
  • Chinese vendors are starting to launch phones with dual cameras and curved screens. We expect that to be the norm for most flagships in 2017. Cameras will continue to be a key focus in the marketing messages by vendors especially given the strong selfie culture in China, as exemplified by the popularity of apps such as Meitu. 
  • Similarly, Chinese vendors will be aggressive with other new technologies such as flexible screens, augmented reality, and other new areas. In the past year, vendors such as Huawei, Xiaomi, and LeEco developed phones with dual cameras, thin bezels, and digital headphone connectors well before many overseas vendors did. Bold experimentation is likely, even if such technologies might not immediately lead to higher shipments.

About IDC Trackers 

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad. 

About IDC 

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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