China’s Smartphone Market Dips for the First Time in Six Years

China’s smartphone market shrank by 4 percent year over year in 2015’s first quarter, with 98.8 million units shipped, research firm IDC reported Monday (May 11).

That tally, while significant on an absolute basis, marks the first time in six years that the Chinese smartphone market actually declined, year on year – and the market also shrank sequentially from the end of 2014, with units down 8 percent. The contraction follows a large inventory build that ended last year, IDC said.

Apple was the top smartphone vendor in China in the latest quarter, with 14.7 percent overall market share. IDC said consumers still desire the larger screens that are a hallmark of both the iPhone 6 and iPhone 6 Plus. It can be inferred from data released last month by another research firm, Kantar Worldpanel ComTech, that urban consumers did much to propel Apple to the No. 1 spot.

Xiaomi slipped to the second position, with 13.7 percent share, pressured by peers in the low to mid-range segment of the market, while Huawei maintained third place. Samsung and Lenovo both led the market at least once last year, but in the latest data slipped to respective 9.7 percent and 8.3 percent shares.

“Smartphones are becoming increasingly saturated in China,” said Kitty Fok, Managing Director at IDC China. “China is oftentimes thought of as an emerging market, but the reality is that the vast majority of phones sold in China today are smartphones, similar to other mature markets like the U.S., U.K., Australia and Japan. Just like these markets, convincing existing users as well as feature phone users to upgrade to new smartphones will now be the key to further growth in the China market.”

IDC, which forecasts relatively flat growth for China in 2015, also projects price competition among higher end segments, as Huawei, Lenovo and Xiaomi look for share in the space. And go to market strategies may feature a greater reliance on retail-branded shops, direct online sales and e-tailing. Tay Xiaohan, senior market analyst with IDC Asia/Pacific’s Client Devices team, said in statement that, “Most of the market’s growth will come from sub-US$150 phones as feature phone users switch to low-cost smartphones.”