The IDC released a report on China’s 2016 smartphone market on Monday, where the most surprising result sees Apple losing market share for 4 percentage points on 2015, ending the 2016 with a meager 9.6 percent and a shipment volume shrinkage of 2.1 percent.
The 2016’s smartphone market has been dominated by Chinese firms like Oppo, Huawei and Vivo with a modest sector growth of 8.7 percent on the previous year.
The real market giants have been Oppo and Vivo, two sister companies based in Guangzhou, even surpassing Apple and Huawei in the case of Oppo.
Specialized in low and mid-end devices, Oppo and Vivo have been gaining consumers trust focusing their marketing efforts on offline retail sites in relatively small cities and on online retailing platforms, thus mixing the distribution channels. Besides their marketing strategies, China’s economic slowdown, an ever changing regulatory system and the emergence of cheap and good alternatives also contributed to the rise of these two companies.
Despite the outstanding performances of Oppo and Vivo, the loss of market share of brands like Apple and Huawei is not exclusively due to them. In the case of Apple, 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 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”.
Not Only China
Chinese smartphone makers not only have been gaining market share in China but, as shown in a report by Canalys analyst firm, they have also obtained wide market share in India.
Still dominated by Samsung with a plummeting growth, -11 percent on 2015, the Indian smartphone market sees a strong performance of Chinese manufacturers such as Xiaomi and, again, Oppo which has seen a growth of 1.578 percent on the previous year.
What we are looking at is a clear trend that will not stop soon, on the contrary it will keep increasing involving more countries.
As reported by IDC, “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.”
What’s Next
The results of the IDC’s report suggest us that some kind of change is undergoing in China relatively to consumers’ desires and spending propensity. Some might link these trends to the efforts China is making for the implementation of economic reforms that are intended to switch from an export trained economy to a consumption trained one.
Without building up a strong middle class with a relatively high disposable income it would be quite difficult, yet this report together with the data released by the China National Bureau of Statistics may suggest this shift is starting.
Foreign firms finally cheer up to see it happen for China constitutes a huge market with more than 800 million potential consumers. On the other hand, addressing these consumers it’s not so easy as the data show.
With a restricting business environment and a censorship policy toward key foreign tech and online services firms, China seems to favor its own companies but it would be a too simplistic reason to explain the rise of Chinese brands.
With more concentration on product quality, Chinese companies are becoming day by day more self-aware of their potentiality, gaining market share on the international ground and making the Chinese market more competitive for foreign companies already operating in China.
Domestic brands are working hard, even harder than foreign firms, and more often embarking on experimental products and marketing solutions that could sound hazardous. Some would call this an aggressive behavior but it should probably be addressed as strong determination.
Moreover, in an outward outlook perspective, Chinese companies have the great advantage of an ample domestic market where first to experiment new services and products then proposing them on the international market. The experimental process is peculiarly Chinese since it is applied also locally to test new policies before applying them nationwide.
As China poses itself as a globalization champion, Chinese companies will focus their sights on foreign countries. It will come with fearful voices from some establishments but it might mean a more vibrant international competitiveness that could force companies to innovate quicker to stand against each other.
Good question Carmen. I didn’t mention it because, more often than not in the last twenty years, companies (most of all private owned) don’t always follow strictly the five-year plan and, in the discourse, since there was little to ascribe to the quinquennial plan I decided to put it apart. However, I would like to include it in a piece about the new efforts in research.
Thank you very much for this well-informed article. Just one question: Why didn’t you mention the 13th Five-year plan and the CCP’s prolonged efforts to foster innovation in order to explain the success of Chinese companies?
Are you an individual businessman or a organisation that wishes to expand in business ??, we offer financial instrument such as BGs, SBLCs, MTNs, LCs, CDs and others on lease and sales at a rate of (3 + 0.5 + X)% of the face value and reasonable conditions from a genuine provider. You are at liberty to engage our leased facilities into trade programs as well as in signatory project(s) such as Aviation, Agriculture, Petroleum, Telecommunication and any other project(s) etc.With our financial/bank instrument you can establish line of credit with your bank and/or secure loan for your projects in which our bank instrument will serve collateral in your bank to fund your project.
We deliver with time and precision as set forth in the agreement. Our terms and Conditions are reasonable and we work directly with issuing bank lease providers, this instrument can be monetized on your behalf for upto 100% funding.Intermediaries/Consultants/Brokers are welcome to bring their clients and are 100% protected. In complete confidence, we will work together for the benefits of all parties involved.
All relevant business information will be provided upon request. If Interested kindly direct your enquiry to
Email:~ instrumentsmandate01@gmail.com serious enquiry only
Skype ID: nathani.abhishek1
True, and this makes Chinese companies perfect candidates for the next wave of tech innovation.
Chinese smartphone companies have two other advantages. An integrated system of knowledgeable suppliers that can match whatever the West produces and experience in selling devises to people with the wide differences in lifestyles common in developing countries.