China’s Smartphone Shipments Post Historic Drop in Q1 2018

15

The latest official data points to a sharp drop in smartphone shipments in the first three months of 2018, as the Chinese domestic market approaches saturation point.

New figures released by China’s Ministry of Industry and Information Technology (MIIT) indicate that the first quarter saw domestic smart phone shipments of 81.87 million, for a historically unprecedented 27% drop.

Official data further indicates that China’s urban mobile phone coverage rate is already in excess of 97%, and that 72% of China’s urban consumers own a smartphone, with smartphone usage rates ahead of developed economies in Europe and North America.

According to analysts this means that the Chinese smart phone market is approaching saturation point following several years of breakneck development.

Since 2017 the performance of the domestic smartphone market has lagged well behind expectations, with full-year sales of less than 500 million units, for the first recorded decline with a drop of 7%.

Leading Chinese smartphone brands such as Coolpad and ZTE are seeing contractions in sales, while Shenzhen-based Gionee recently revealed that it had slashed staff and suspended shipments due to a financing crisis, and Zhuhai-based Meizu has reduced employee numbers for three consecutive years.

Gionee is reportedly 8.6 billion yuan in arrears to banks, as well as owes suppliers around 4 billion yuan, for total debts of over 10 billion yuan.

According to analysts intensifying competition amongst domestic smartphone producers promises to lead to a major reshuffle of the industry, with the entire sector affected by ailing sales.

Huawei, XIaomi OPPO and Vivo are China’s four leading smartphone firms, and alongside Apple jointly account for a more than 90% domestic market share, up from 79% last year.

OPPO and Vivo have recently downscaled orders, however, with some manufacturers reporting a shrinkage in orders of around 10% or more.

The saturation of the domestic market is prompting China’s leading smartphone makers to turn their sights abroad.

Xiaomi emerged as India’s biggest smartphone brand in the third quarter of 2017, with a market share of 57%, while OPPO has a strong presence in the South-east Asian market, and Huawei is gaining ground in Europe.

The introduction of 5G technology is also expected to cause a major shake-up of China’s smartphone industry, after China Mobile teamed up with Huawei to launch the 5G standard Open Lab In Beijing last month.

“The technical threshold for 5G technology is higher than for 4G,” said telecommunications expert Kang Zhao (康钊) to the Workers Daily. “While they may be at the forefront domestically, manufacturers like OPPO and Vivo, who depend upon frequent new phone releases and changes in spokespeople to grab attention, will be highly vulnerable to crisis once they fall behind in terms of technology.”

Kang sees polarised development paths for China’s smartphone manufacturers ahead, as well as an accelerated reshuffling of the whole market.

 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here