China Smartphone Market Sees Highest Shipment Ever in 4Q2015

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About 117.3 million smartphones were shipped to China in the fourth quarter of 2015, according to International Data Corp. (IDC). This is an 8% year-over-year (YoY) growth against the same period last year, partly driven by China's annual singles day online shopping festival in November and Huawei's strong shipments in the quarter. China's 4Q2015 growth boosted the calendar year 2015 growth to 3% YoY.

"Xiaomi, Huawei and Apple are the top smartphone players in 2015. This is a stark contrast to the top players in 2013, which was Samsung, Lenovo and Coolpad – with Samsung clearly dominating other players. With operators reducing smartphone subsidy and given the volatility of consumers’ brand preference in the market, the smartphone scene has changed significantly since then," says Tay Xiaohan, Senior Market Analyst with IDC Asia/Pacific's Client Devices team. "Xiaomi entered the market at a time when the China smartphone market was still growing, and was able to capture a significant market share with its disruptive sales model. Huawei, with its investments in R&D, strong products, branding and channel connections, saw it having significant growth in 2015. Apple, on the other hand, continues to be a strong and desirable brand in the eyes of the Chinese consumers. With the Chinese market now slowing down, it is unlikely that we will see any new players making a big impact on the smartphone market compared to the way Xiaomi did in the previous years."

Huawei was the biggest winner with both the biggest gain in Average Selling Prices (ASPs) and shipment growth YoY, as it saw its key flagship product, the Ascend Mate 7 selling well in 2015. With Huawei having an increasing number of flagships and phone shipments in the $200<$500 price range, it has impacted the shipments of Samsung for both its mid-range and high-end phones. Being a strong brand in the PRC market, it will continue to impact Samsung's shipments as it increases its ASPs in the market. While OPPO had a YoY decline in ASPs, its ASP was still higher than that of Huawei, with its R7 doing well in 2015. Despite being the top smartphone vendor for China in 2015, Xiaomi's ASP was the lowest among the top five vendors, with growth mostly coming from its low-end Redmi models.

IDC highlights other trends to expect in China this year which include:

• Expansion of offline channels. The novelty of flash sales/buying phones online has started to die down. IDC believes that the share of phones sold through online channels will not see a huge growth in the coming years compared to the high growth that it saw in 2015. Vendors will seek to expand their offline channels in 2016.
• Higher price tier competition. Replacement users are likely to seek for a better device experience, and vendors need to move upstream in order to cater to the needs of this group of users.
• Consolidation of the smaller vendors. As growth in the market remains flat, and with the increased cost that vendors need to face to expand their offline channels, this may lead to a consolidation of the smaller smartphone vendors.

"IDC expects the smartphone growth in China to be flat in 2016, and this is largely due to the maturing market rather than the slowing economy. Despite the economic headwinds, we expect major vendors such as Apple and Huawei to continue to do well in 2016 as consumers seek more sophisticated products," ends Tay.