China Smartphone Shipments Thrive as Apple Stumbles

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Apple Inc.’s (NASDAQ: AAPL) earnings showed how badly its sales have eroded in China. Further proof is data from Strategic Analytics, which shows smartphone shipments in China soared in the third quarter, while Apple’s cratered.

Linda Sui, director at Strategy Analytics, said:

China smartphone shipments grew a healthy 15 percent annually from 105.0 million units in Q3 2015 to 120.9 million in Q3 2016. This was the fastest growth rate for a year. China remains by far the world’s largest smartphone market, accounting for nearly 1 in 3 of all 375.4 million smartphones shipped globally this quarter. China’s smartphone market is returning to faster growth in the second half of this year, due to a more stable economic climate, multiple flagship 4G model launches, and solid direct or indirect subsidies from Chinese operators.

With one exception, local smartphone companies were the winners. Neil Mawston, executive director at Strategy Analytics, said:

Huawei shipped 18.0 million smartphones for 15 percent China marketshare in Q3 2016, dipping slightly from 16 percent a year ago. Huawei remains the number one smartphone vendor in China, but it is steadily losing ground to ambitious rivals OPPO and Vivo. OPPO soared 136 percent annually to ship a record 17.0 million smartphones and capture 14 percent marketshare in Q3 2016. OPPO is closing in on Huawei and is poised to overtake in the next quarter or two. OPPO’s R and A series models have been well received in second-tier cities and rural areas of China. Vivo maintained third position with a record 14 percent smartphone marketshare in China during Q3 2016. Vivo’s success lies in good hardware designs, robust product quality, strong retailer penetration, and rising brand awareness among mass-market consumers.

And the local loser:

Xiaomi delivered yet another weak quarter, falling 31 percent annually and shipping 11.4 million smartphones in China in Q3 2016. Xiaomi clung on to fourth position with 9 percent marketshare, almost halving from 16 percent one year ago. Xiaomi is facing tough competition in mid-tier segments from Huawei, Gionee, LeEco and others.

As for Apple:

Apple iPhone captured 6 percent smartphone marketshare in China in Q3 2016, sliding from 10 percent in Q3 2015. China is Apple’s biggest challenge right now, where it is battling intense competition from Huawei, OPPO and others with their improved high-end smartphone designs and expanded distribution networks. The new iPhone 7 range will help Apple to fight back in the next quarter or two, but this may bring only temporary relief as local Chinese players continue to ramp up their efforts to conquer the China market.

China Smartphone Vendor Shipments and Marketshare in Q3 2016 [1]

China Smartphone Vendor Shipments (Millions of Units) Q3 ’15 Q3 ’16 Growth YoY %
Huawei 16.5 18.0 9%
OPPO 7.2 17.0 136%
Vivo 9.1 16.5 81%
Xiaomi 16.5 11.4 -31%
Apple 10.8 7.5 -31%
Others 44.9 50.5 12%
Total 105.0 120.9 15%
China Smartphone Vendor Marketshare (%) Q3 ’15 Q3 ’16
Huawei 15.7% 14.9%
OPPO 6.9% 14.1%
Vivo 8.7% 13.6%
Xiaomi 15.7% 9.4%
Apple 10.3% 6.2%
Others 42.8% 41.8%
Total 100.0% 100.0%
Total Growth: Year-over-Year (%) 0.0% 15.1%
Source: Strategy Analytics

1. Numbers are rounded.

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