• Entering 2025, the nationwide subsidy for mobile phone sales has ignited China’s smartphone market.
• Smartphone sales in the week of January 20-26 jumped nearly 65% YoY to reach over 9.5 million, indicating Chinese consumers’ good early response to the subsidy.
• Smartphone sales in January were up 17.6% YoY to reach nearly 29 million units, with Huawei, vivo and Xiaomi capturing the top three spots.
• Counterpoint expects the subsidy to generate an additional two to three points of annual growth in Q1 2025.

As part of its big effort to stimulate China’s domestic consumption, the National Development and Reform Commission (NDRC) announced new subsidies for digital products on January 8, 2025. Under this program, three categories of digital products — mobile phones, tablets and smartwatches — are eligible for a 15% price subsidy on products priced below 6,000 yuan, with a maximum subsidy of 500 yuan per item per category.

According to Counterpoint’s China Weekly Tracker, smartphone sales in the week of January 20-26 jumped nearly 65% YoY to reach over 9.5 million units and maintained a high level in the following weeks in spite of weakened economic activity during the Chinese New Year holiday.

The nearly 65% YoY growth during the fourth week indicates a good early response to the subsidy. It is also consistent with the assumption that Chinese consumers would be driven to replace or upgrade their smartphones earlier than planned, thus generating more demand in a short span of time.

To better utilize the tide of replacement brought about by subsidies, both OEMs and distributors proactively cut retail prices for some selected models, making the period around the Spring Festival this year a more attractive sales season. According to Counterpoint’s Market Pulse, China’s smartphone sales in January reached close to 29 million units. Huawei, vivo and Xiaomi captured the top three spots, collectively accounting for nearly 53.8% of the total sales. In terms of price bands, the market saw more significant growth in the 2,000-5,000 yuan range.

Although the market has been ignited, there is a concern that the short-period sales boom would be followed by a sales slump after the subsidy ends. At the same time, the massive subsidy has come at a critical time – when the AI era of mobile phones has just begun. Counterpoint expects this will help accelerate the migration from traditional phones to generative AI phones, leading the Chinese smartphone market to develop steadily and healthily over a longer period of time. For 2025, Counterpoint expects the subsidy in Q1 to generate an additional two to three points of annual growth in China’s smartphone sales.