• Sales volume fell by more than 10% in the fourth quarter and in 2018.
• Huawei (including Honor) has maintained high-speed growth with a run of hit products.
• Oppo, vivo and Xiaomi sales fluctuated in 2018, but are still ahead of the overall market.
• Nokia and China Mobile are the highlights of the second-tier brands.

According to the latest research from Counterpoint’s Market Pulse service, China’s overall smartphone sales volume declined 11% YoY in 2018. As the world's largest smartphone market, it has declined for two consecutive years. Commenting on the performance of the overall market, James Yan, Research Director said, “The sharp YoY decline in 2018 can be attributed to the generally lengthened upgrade cycle of consumers and increases in ASP. The reason behind this is the weakness of China's economy, especially private enterprises. The Chinese economy is transitioning from an external, export-led economy to one where internal consumption plays a bigger role. In addition, China faces many uncertainties brought about by the trade war between China and the United States. With a weakened economy, Chinese consumers have become more pragmatic and are less likely to frequently change their smartphones.” James Yan further added, “In such a downturn in China's smartphone market as a whole, OEMs tried to compete through innovative technologies such as water drop screens, under-display fingerprint sensors and 3D face recognition technologies. But the result was little overall change in the competitive landscape; the top five OEM rankings in 2018 were the same as in 2017, though consolidation has occurred. The combined market share of the top five OEMs increased from 75% in 2017 to 84% in 2018, with some smaller brands having withdrawn from the market.”

Exhibit 1: China Smartphone Market Share Full Year 2018 and Q4 2018

Source: Counterpoint Research Market Pulse

Source: Counterpoint Research Market Pulse

Commenting on the future development trend, Mengmeng Zhang, Research Analyst at Counterpoint, said, “Looking ahead, we expect that tier one brands will consolidate their position further through multi-channel and diversified product strategies, and strive to expand their product lines beyond mobile phones, i.e. smart watches, smart TV and so on. For small brands, it has become more and more difficult to survive. They have to find a more niche market to meet customer preferences, for example gaming phones and luxury mobile phones.” Flora Tang, Research Analyst at Counterpoint, highlighting the significant growth achieved by Huawei, pointed out, “Huawei's long-term R&D efforts have paid off successfully in its development and integration of cutting-edge technology products. Huawei and Honor are winning the trust of Chinese consumers based on the fact that its marketing team has shaped Huawei and Honor into technology-rich brands that are deeply embedded in consumers minds”.

Key takeaways for the China market in 4Q18 and 2018:

• The Market:

  • The China smartphone market declined by 12% YoY in 4Q 2018 and declined by 11% for the full year 2018.
  • We see continued consolidation in the Chinese market, with the top five OEMs accounting for 84 percent of the smartphone market in 2018, compared to 75 percent in the same period last year.
  • Huawei (including Honor) was firmly the market leader in China in 2018, capturing 25% market share. We saw outstanding contributions from the Nova series in 2018.
  • OPPO and vivo’s market share did not change much compared to 2017, but their sales have declined slightly.
  • Apple's volume dropped 12% YoY due to its high-ticket price and impact from competitors. But it still has the highest sales revenue among all brands.
  • Xiaomi held a 12% market share in 2018, but sales fell 7% YoY.
  • Among many small brands, China Mobile and Nokia brands relied on localized channels to achieve good performance in 2018.

• The Technologies:

  • New technologies such as bezel-less displays (water-drop or notch screen), AI-powered processors and dual cameras have penetrated into mid to low-end models. The competition in China was increasingly fierce in 2018.
  • Players invested more resources to optimize mobile camera functions, such as night-time shots and wide-angle shots.
  • Voice assistant has been adopted by mainstream players, including Xiaomi’s “Xiao Ai”, Huawei’s “Xiao Yi”, OPPO‘s Breeno and vivo’s “Jovi”.
  • 3D face recognition technologies entered the high-end market at the end of 2018.

The comprehensive and in-depth Q4 2018 Market Pulse is available for subscribing clients. Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth, latest research, insights or press enquiries. The Market Pulse research is based on sell-through estimates based on vendor’s IR results, vendor polling triangulated with supply chain checks and secondary research.

Analyst Contacts:

James Yan闫占孟 +86 15810182576 [email protected] Tarun Pathak +91 9971213665 [email protected] Mengmeng Zhang +86 18611804269 [email protected] Flora Tang +852 5545 2529 [email protected] Follow Counterpoint Research