Although China's smartphone market is slowing down as other parts of the world does, it is still the largest around the globe. And as technology evolves at a fast pace in the country, industry watchers will always have to pay close attention to that market.
On the one hand, fierce competition among local players including Huawei, Xiaomi, Vivo and OPPO is bringing about new compelling choices for local customers. The balance between specification and prices is driving foreign players out of the market.
On the other hand, domestic players are also eyeing the globe market, with Huawei now being a brand with world recognition, OnePlus becoming more popular in overseas markets than in its home turf and Transsion being Africa's smartphone king.
In this article, we will bring you wide-ranged knowledge of China’s smartphone market and hopefully it will be your ultimate guide to understanding this fast-evolving market.
China's smartphone market Overview
China surpassed the United States to become the world’s largest smartphone market in February 2013.
Since 2011, the volume of smartphone shipments in China has steadily increased, reaching over 460 million units in 2016 at the highest ever shipment.
The figure dropped slightly in 2017 and even fell below 400 million units in 2018, parallel to the economic downturn worldwide and demonstrating the slowing down of Chinese economic growth.
According to the state-run China Academy of Information and Communications Technology (CAICT), 2018’s smartphone shipments in China were down by 15.5%.
The figure is worse than those provided by analyst house Canalys, which reckoned Chinese smartphone shipments were down 12% last year.
Why did this happen?
It’s Largely because smartphones haven’t evolved much in recent years. Even cheap phones are powerful enough for most tasks these days, while further increases in screen resolution won’t mean much to the human eye.
There are also no new “killer apps” that require an upgrade. So, in short, your phone from a couple years back is probably still serving you just fine — and for the industry, that’s a big problem.
However, due to the largest population in the world, more smartphones were sold in China than in any other country. The country is forecasted to maintain its market leadership and is projected to account for about a quarter of the worldwide smartphone shipments in 2019.
China's smartphone market share by vendor
According to an August report by the IDC, smartphone shipments in China stood at 98 million units in the second quarter of 2019, down 6% from the same period last year. This was better than expectations of an 9% contraction.
Among local vendors, Huawei is at the top with a 37% market share, followed by Vivo, OPPO and Xiaomi.
Since late May, Huawei's overseas smartphone sales were hampered. But in the domestic market, the company leveraged its existing strengths to drive its local market share to a new high.
It continued to increase its penetration and influence in tier 4-6 cities with new agents and additional manpower. Its P30 series and the Honor 20 series also launched in June, supported by strong imaging capabilities and by the good word-of-mouth accumulated over previous generations of products.
Vivo’s shipments declined during the quarter, as no new flagships were released. But the vendor strengthened its portfolio in the X series as well as the new S series.
Vivo’s Channel coverage expanded for the Z series, which was originally launched for the online market, but now adds to the vendor’s portfolio in the mainstream segment along with the Y series.
OPPO’s A9 model did well in the mainstream segment, and the new Reno series does a better job than its preceding R series in covering a range of prices in the mid-to-high end. But due to the success of Huawei’s nova series in tier 4-6 markets, the new Reno series failed to be as successful as the R15 in the same period last year.
Xiaomi was hampered by both internal organizational changes as well as timing differences in its flagship product, which launched a quarter earlier this year. Xiaomi’s challenges in China include transitioning to new products and managing its offline channels.
Multiple rounds of price adjustments and promotions during the June online shopping period helped Apple’s shipments in China in 2Q19. Its shipment declines thus narrowed from the previous quarter, with its market share being flat year on year.
The rise of Huawei
In 2014, the smartphone market in China was fierce with both domestic brands. Foreign brands like Samsung and Apple all accounting for only around ten percent of the market.
However, in the last few years, the market was much more concentrated since Huawei stood out from the competition along with two other domestic brands Oppo and Vivo.
The three brands have become the largest players in the market with a total combined market share of over 60%.
Additionally, Huawei's brand recognition has spread to other parts of the world.
In the first quarter of 2012, the smartphone shipments of Huawei only accounted for around three percent globally, and after years of work, the market share of Huawei has reached over 17 percent.
Global shipments of Huawei devices have doubled in the past three years, from slightly over 107 million units in 2015 to 200 million units in 2018.
Huawei was founded in 1987 by Ren Zhengfei. Initially focused on manufacturing phone switches, Huawei has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China, and manufacturing communications devices for the consumer market.
During its first several years the company's business model consisted mainly of reselling private branch exchange (PBX) switches imported from Hong Kong.
Meanwhile, it was reverse-engineering imported switches and investing heavily in research and development to manufacture its own technologies.
By 1990 the company had approximately 600 R&D staff and began its own independent commercialization of PBX switches targeting hotels and small enterprises.
The company's first major breakthrough came in 1993 when it launched its C&C08 program controlled telephone switch.
In 1997, Huawei won a contract to provide fixed-line network products to Hong Kong company Hutchison Whampoa.
Later that year, Huawei launched its wireless GSM-based products and eventually expanded to offer CDMA and UMTS.
In 1999, the company opened a research and development (R&D) center in Bangalore, India to develop a wide range of telecom software.
In May 2003, Huawei partnered with 3Com on a joint venture known as H3C, which was focused on enterprise networking equipment. It marked 3Com's re-entrance into the high-end core routers and switch market, after having abandoned it in 2000 to focus on other businesses. 3Com bought out Huawei's share of the venture in 2006 for US$882 million.
In 2005, Huawei's foreign contract orders exceeded its domestic sales for the first time. Huawei signed a Global Framework Agreement with Vodafone. This agreement marked the first time a telecommunications equipment supplier from China had received Approved Supplier status from Vodafone Global Supply Chain.
Huawei also signed a contract with British Telecom (BT) for the deployment of its multi-service access network (MSAN) and Transmission equipment for BT's 21st Century Network (21CN).
In 2007, Huawei began a joint venture with U.S. security software vendor Symantec Corporation, known as Huawei Symantec, which aimed to provide end-to-end solutions for network data storage and security. Huawei bought out Symantec's share in the venture in 2012.
In May 2008, Australian carrier Optus announced that it would establish a technology research facility with Huawei in Sydney.
In October 2008, Huawei reached an agreement to contribute to a new GSM-based HSPA+ network being deployed jointly by Canadian carriers Bell Mobility and Telus Mobility, joined by Nokia Siemens Networks.
Huawei delivered one of the world's first LTE/EPC commercial networks for TeliaSonera in Oslo, Norway in 2009.
In July 2010, Huawei was included in the Global Fortune 500 2010 list published by the U.S. magazine Fortune for the first time, on the strength of annual sales of US$21.8 billion and net profit of US$2.67 billion.
In October 2012, it was announced that Huawei would move its UK headquarters to Green Park, Reading, Berkshire.
In September 2017, Huawei created a Narrow Band IOT city-aware network using a "one network, one platform, N applications" construction model utilizing IoT, cloud computing, big data, and other next-generation information and communications technology, it also aims to be one of the world's five largest cloud players in the near future.
In April 2019, Huawei established Huawei Malaysia Global Training Centre (MGTC) at Cyberjaya, Malaysia, which is Huawei's first training center outside of China.
As of the end of 2018, Huawei sold 200 million smartphones. They reported that strong consumer demand for premium range smart phones helped the company reach consumer sales in excess of $52 billion in 2018.
Vivo’s history
Vivo is a Chinese multinational manufacturer of smartphones headquartered in Dongguan, Guangdong province, China.
It is owned by BBK Electronics which is a Chinese multinational firm specializing in electronics such as television sets, MP3 players, digital cameras and smartphones.
Vivo develops software for its phones, distributed through its vivo App Store, with iManager included in their proprietary, Android-based operating system, Funtouch OS.
Founded in 1995, vivo entered the telecommunication and consumer electronics industry with landline phones and wireless phones.
From 2011, vivo started its smartphone business. As of 2014, vivo releases and markets its smartphones under the vivo brand, ranking as the 5th top smartphone brand in China, and 10th top smartphone brand globally.
In 2014, vivo sold 25 million units in mainland China, in 2015, the sales volume reached 45 million worldwide, with an average retail price of $300.
Its international expansion began in 2014, when the company entered the Thai marketplace. Vivo quickly followed up with launches in India, Indonesia, Malaysia, Myanmar, Philippines, Thailand, and Vietnam.
In 2017, vivo entered the smartphone market in Russia, Sri Lanka, Brunei, Macau, Cambodia, Laos, Bangladesh, and Nepal.
In June 2017, it entered the Pakistan mobile phone market and the vivo brand is currently experiencing rapid growth in popularity in the country.
On 26 November 2017, vivo entered the Nepali market with its Y53 and Y65 models. In 2019, it started operations in the Middle East.
Vivo is now among the top five most profitable smartphone brands in China, with annual production capacity is 60 million units.
Currently 20,000 operators work in vivo, and 3,000 engineers are in four R&D centers in Dongguan, Shenzhen, Nanjing and Chongqing. From hardware design and manufacture, to software development (Android based Funtouch OS).
OPPO’s evolution
OPPO is headquartered in Dongguan, Guangdong, and known for its smartphones, Blu-ray players and other electronic devices that are made in China. It is also owned by BBK Electronics.
The brand name OPPO was registered in China in 2001 and launched in 2004.
In the early days OPPO made its name by selling high-quality Blu-ray players, amplifiers and headphones.
Its entry into the phone business came in 2012, quite late in the game. Still, the company grew quickly, becoming China's top smartphone brand in Q2 2016.
The mobile handset that no one might know that OPPO produced was R819/R819T. While the handsets that you might have heard falls under Find, N and R Series.
The N1 was world’s first handset that came with a rotating camera that can be used as back or rear and that’s when the camera dedicated N Series was born in December 2013.
After that next year in March, company launched the Find 7a and then Find 7, the later sported the world’s first Quad HD (2560 x 1440) display, which was available in May 2014.
Later that year in October, company announced their design focused smartphone, the R5, which was slimmest smartphone of the year measuring just 4.9mm.
These series were upgraded in the coming year and thanks to that the brand is listed among the top five smartphone brands in the world, replacing the likes of Lenovo and Xiaomi.
Considered as the premium smartphone maker, OPPO relies on the strong offline retailer network it has created in China.
OPPO started its international expansion in 2010 starting with Thailand, where the brand first announce Find 3 and then later showcased the Find 5, which was followed by the Find 7.
In parallel, the company expanded its presence in countries like Philippines, Myanmar, Vietnam, Indonesia, Malaysia, India, Bangladesh, Pakistan and many more regions. The company operates locally in these regions catering the needs according to the audience.
Xiaomi’s history
Xiaomi was founded in April 2010 by ex-Kingsoft CEO Lei Jun, as a software company creating a new custom ROM based on Google’s Android.
Their aim was to provide additional functionality that Android had yet to offer and an easy to use user interface.
MIUI, the ROM which the team created, became a huge success and has been ported to many devices.
As of 2014, MIUI can be downloaded and installed to over 200 devices in both English and Chinese, even non developers can easily install MIUI to their phones using the MIUI Express APK.
As of the end of 2013 Xiaomi had over 30 million MIUI users worldwide! Very impressive for such a young company!
The MIUI ROM was likened to Apple’s iOS for being very easy to use whilst providing sophisticated services such as cloud backup, an easy to use music player and their own app store.
The team at Xiaomi have always wanted users to feel part of the company and happily take on fan feedback via multiple channels and update the ROM every Friday with bug fixes, optimization and additional features.
The Xiaomi Mi 1 smartphone was announced in August 2011. It has Xiaomi's MIUI firmware. The device could also be installed with stock Android.
The Mi One was a top spec phone with a great price way ahead of its time, this has remained Xiaomi’s philosophy from day one.
In August 2012 Xiaomi announced the Xiaomi Mi 2 smartphone. On 24 September 2013 Xiaomi sold over 10 million Mi 2 phones.
On 5 September 2013, Xiaomi CEO Lei Jun announced plans to launch an Android-based 47-inch 3D-capable Smart TV.
In September 2013, Xiaomi announced its Mi 3 phone.
On 25 September 2013, Xiaomi announced plans to open its first service center in Beijing.
By October 2013 Xiaomi was the fifth-most-used smartphone brand in China.
In 2013 it sold 18.7 million smartphones.
In 2014 Xiaomi announced its expansion outside China, with their first international headquarters in Singapore. Future product launches and activities in the region will be set up there.
Following Singapore, the company opened in Malaysia, Philippines and India, and plans to enter Indonesia, Thailand, Russia, Turkey, Brazil and Mexico in the following months.
In April 2014 Xiaomi purchased the Internet domain mi.com for a record US$3.6 million, the most expensive domain name ever bought in China, replacing xiaomi.com as the official Xiaomi domain.
In November 2014 Xiaomi said it would invest US$1 billion in television content building.
In December 2014 Xiaomi completed a round of equity financing led by Hong Kong-based technology fund All-Stars Investment Limited, a fund run by former Morgan Stanley analyst Richard Ji raising over US$1 billion, with a valuation of more than US$45 billion making it one of the most valuable private technology companies in the world.
The company sold over 60 million smartphones in 2014.
In April 2015 Xiaomi announced it would make its Mi devices available through two of India's major e-commerce sites and through offline retailers for the first time.
On 23 April 2015, Xiaomi CEO Lei Jun and VP Hugo Barra came together to announce a new smartphone named Mi 1s in India, the first phone to be launched in India before any other country. The Xiaomi Mi Band was also launched in the same event.
On 24 February 2016, Xiaomi launched the Mi 5 smartphone.
On 9 March 2016, Xiaomi launched its Redmi Note 3 in India. It was a groundbreaking smartphone at the time in the budget segment and was well received by Indian customers. It made record sales on the year, and Xiaomi brand name continued to grow.
On 10 May 2016, Xiaomi launched the Mi Max.
Shortly after starting operations in Brazil the company left the country in the second half of 2016.
On 20 February, Xiaomi officially launched in Pakistan and brought its Mi and Redmi Note lineup to the country.
On 19 April, Xiaomi launched Mi 6, its flagship phone at the time.
In May, Xiaomi opened two MI Home stores; one in Bangalore (India) and one in Bangladesh. It is the first of several planned for the region.
On September 5 Xiaomi released Mi A1, which is the first Android One smartphone under the slogan: Created by Xiaomi, Powered by Google. In the event key note Xiaomi stated they started working with Google for the Mi A1 Android One smartphone almost six months ago. An alternate version of the phone is also available with MIUI and is known as MI 5X.
In March 2018, at China's annual legislative session in Beijing, Xiaomi CEO Lei Jun announced that Xiaomi has "always been considering entering the US market" and will launch in the US smartphone market by late 2018 or early 2019. Xiaomi already sells assorted items in the US such as power banks and Bluetooth speakers.
On May 3, 2018, Xiaomi filled to go public on the Hong Kong Stock Exchange and aims to raise $10 billion in IPO.
On May 3. 2018, Xiaomi announced in partnership with 3 (telecommunications) to sell smartphones in the United Kingdom, Ireland, Austria, Denmark, and Sweden.
In May 2018, Xiaomi began selling some of their smart home products in the United States through Amazon.
In September 2018, Xiaomi launched its 4th 'Mi Home' experience store in India. They also launched their products in the UK, offering UK customers to purchase without customs fees.
While commenters are quick to call the Beijing based company “The Apple of China”, Xiaomi prefer to compare themselves to Amazon, they create powerful hardware which they sell at cost price and rely on their services and content to make up most of the revenue.
There are similarities between Xiaomi and Apple however, they are both hardware and software companies, both have strong control over supply chains and both have a feverish fan base.
Apart from this the two companies don’t have much else in common, Apple price their smartphones at ludicrous prices and don’t take on much customer feedback where as Xiaomi do the opposite.
OnePlus history
OnePlus is based in Shenzhen, Guangdong. It was founded by Pete Lau (CEO) and Carl Pei in December 2013. The company officially serves 34 countries and regions around the world as of July 2018. They have released numerous phones, amongst other products.
Compared to a number of other mobile tech giants in the market, OnePlus is a relatively young company but it managed to rise extremely fast thanks to releasing extremely compelling flagship-grade smartphones at affordable price tags.
The company has been using the "Never Settle" moto from the start. It has managed to sell quite a few devices to date, and establish itself as one of the best smartphone manufacturers in the market.
The company's first smartphone, the OnePlus One made quite a splash in the tech community.
OnePlus wasn't exactly all that well-known back there, but all of that changed over the years. The company's initial practice of invite-only purchases also changed. Such practice was in place due to low smartphone stock.
The OnePlus One is the company's very first smartphone, and it was referred to as the "Flagship Killer" back when it launched, mainly due to its flagship-grade specs and qualities, and not a huge price tag.
The company unveiled the OnePlus One on 23 April 2014 which was intended to capture market from the Google Nexus series.
On 9 March 2014, the company expanded its operations to the European Union.
On 16 December 2014, The Supreme Court of India and Delhi High Court banned the import and sale of OnePlus One phones following a lawsuit by Micromax alleging it has exclusivity for shipping phones with Cyanogen OS software in India.
On 21 December 2014, the ban was lifted. The device continues to be shipped with Cyanogen OS; however, a customized version of Android specially designed by OnePlus and named OxygenOS has been released, allowing later OnePlus devices to be sold in India.
OnePlus made its products available in Southeast Asia for the first time, partnering with Lazada Indonesia on 23 January 2015 and was expected to expand during that year throughout the region.
In June 2016, OnePlus decided to pull out of the Indonesian market due to local regulations for imported 4G smartphones restricting sales of the OnePlus 2.
Early phones were only available through a system whereby customers had to sign up for an invite to purchase the phone at irregular intervals. The system was claimed to be necessary for the young company to manage huge demand.
OnePlus ended the invite system with the launch of OnePlus 3 on 14 June 2016. Announced via an interactive VR launch event, the OnePlus 3 initially went on sale within the VR app itself. OnePlus touted the event as the world's first VR shopping experience.
The phone was made available for sale later that day in China, North America and the European Union on the OnePlus website, and in India on Amazon India.
Transsion: the African phone king
Transsion is a manufacturer of mobile phones based in Shenzhen, China. It was the largest smartphone manufacturer by sales in Africa in 2017, and also sells mobile phones in South Asia.
Its brands include phone brands Tecno, Itel and Infinix, after-sales service brand Carlcare, and accessories brand Oraimo. It manufactures phones in China, Ethiopia, Bangladesh and India.
Transsion Holdings was founded as Transsion Technology in Hong Kong in 2006, with a focus on the development, manufacturing, sales, and services of mobile communication products.
Transsion entered the African market with its Tecno and Itel brands, and started focusing on the African market in July 2008, initially with feature phones. Transsion released its first smartphone in 2014.
Transsion set up its Nigerian subsidiary in June 2008, and had subsidiaries in seven countries in Africa by October that year.
Transsion set up a manufacturing plant in Ethiopia in 2011.
The company entered the Indian market in 2016.
The market share of Transsion's smartphone brands in Africa combined surpassed that of Samsung in 2017, making Transsion the largest manufacturer of smartphones for the African market in the fourth quarter of 2017.
Transsion was also the largest manufacturer of mobile phones in Africa in the first half of 2017.
Transsion's 2018 attempt at a reverse takeover failed. In October 2018, Transsion Holdings started producing smartphones in their new manufacturing plant in Bangladesh.
Transsion Holdings became a public listed company in September 2019 by listing on the STAR Market section of the Shanghai Stock Exchange.
Samsung: from No 1 to also-ran
Samsung was once the dominant smartphone player in China, but now it ranks dead last among the major brands.
Samsung’s share of the Chinese market shrank to 1% in the first quarter from around 15% in mid-2013, as it lost out to fast-growing homegrown brands such as Huawei and Xiaomi, according to market research firm Counterpoint.
Considering it held 20 per cent five years ago, it has been a stunning fall from grace for the Korean electronics giant, with analysts pinning that on its failure to localize its products to satisfy demands of Chinese consumers.
Other factors, including the Galaxy Note 7 exploding battery recall of October 2016, the rapid rise of intensely competitive local Chinese brands, also conspired to bring it down in China.
In a bid to regain some of the lost ground, Samsung has engaged two of China’s most popular young actors, Zhu Yawen and Jing Boran, as celebrity endorsers for the new Galaxy S9 model announced on Sunday at the World Mobile Conference in Barcelona.
But this doesn’t seem to help much.
In October, 2019, Samsung ended mobile telephone production in China, hurt by intensifying competition from domestic rivals in the world’s biggest smartphone market.
The shutdown of Samsung’s last China phone factory comes after it cut production at the plant in the southern city of Huizhou in June and suspended another factory late last year, underscoring stiff competition in the country.
The South Korean tech giant’s ceased phone production in China follows other manufacturers shifting production from China due to rising labor costs and the economic slowdown.
Sony also said it was closing its Beijing smartphone plant and would only make smartphones in Thailand.
Apple story in China's smartphone market
For Apple, the real action in China began in late 2009, when the iPhone 3GS officially went on sale through China Unicom, which, despite an impressive 140 million subscribers, is only the country’s second-largest wireless carrier.
This was the first real foot in the door for Apple: The iPod and the Mac had never been strong sellers in China, and previous iPhone models were only imported or sold on the gray market.
In those early days, the iPhone had a few challenges working against it: It was an expensive and hard-to-find product, and it was crippled due to local regulations that prohibited it from using Wi-Fi.
Sales were slow at first; it took over a month for China Unicom to sell 100,000 iPhones—that’s compared to the 1 million units sold across eight other countries on the iPhone 3GS’s opening weekend alone.
But sales ramped up quickly as Apple added more distribution points in China for its new iPhone, along with a second Apple Store in Shanghai in July 2010. Apple’s first store, in Beijing, had opened two years earlier.
In Apple’s first two quarters of the 2010 fiscal year, its revenue in China more than doubled, to $1.3 billion. And when the iPhone 4 went on sale in October 2010, Apple hit the 100,000 sales mark in China within just four days.
Around the same time as the iPhone 4 launch, Apple also began selling the iPad in China, and the tablet quickly became a strong seller. According to IDC, the iPad had cornered nearly two-thirds of the tablet market in China in the first half of 2011.
It helped that Apple had launched an online store in China, along with a Chinese version of the App Store, during the previous fall.
Apple’s attention to China was beginning to have a major impact on the company’s earnings. In 2009, the entire Asia Pacific region brought in just $3.18 billion. The following year, annual revenue jumped to $8.26 billon, and in 2011, Asia Pacific revenue reached $22.5 billion—a more than 600 percent increase in two years. And by the fourth quarter of 2011, roughly 70 percent of that revenue was coming from China.
Over those two explosive years, China grew from 2 percent to 12 percent of Apple’s total earnings, as Chinese customers got caught up in the Apple craze.
When the iPhone 4s launched in China in January 2012, it created such a frenzy that one Beijing store was forced to close, and SWAT teams had to step in to keep the peace.
But today those are the past, as Apple’s year-over-year revenue growth in China peaked in 2015, a sharp slowdown was seen as the whole market slows.
