SINGAPORE – China’s smartphone market was down 1% year-over-year in the third quarter, but the top five smartphone companies grew from 65.2% to 76% during the third quarter, compared to the same period last year, says IDC.  

In particular, Xiaomi saw good year-over-year growth, while Apple finally bounced back after declining year-over-year for the past six quarters in China.

Though the top smartphone companies are finding it harder to launch models with significantly different specifications or new technologies that will convince consumers to upgrade their phones, they continued to gain share from companies who have declined, such as Samsung and LeEco.

"Even though the market is getting saturated in China, smartphone companies are still aggressive in trying to steal market share from their competitors,” said Tay Xiaohan, research manager, Client Devices Research, IDC Asia/Pacific. “OPPO and Vivo used to be the main companies with aggressive sponsorship of key television programs. However, we see increased aggression from Huawei and Xiaomi in this aspect in recent months. Xiaomi began sponsoring three popular entertainment programs on television. With competition heating up, top smartphone players will need to either maintain or increase their marketing activities in the coming quarters. The implication for smaller players who do not have a high marketing budget is it will be harder to thrive or survive in the saturated China smartphone market. The smaller smartphone companies that focus on the Tier 3 to Tier 5 cities will continue to depend on the subsidy from operators to target a very niche consumer segment.”

OPPO continues to be the only Chinese company out of the top four smartphone companies in China that can depend on one or two models to drive sales. Its R11 series made up more than half of its overall shipments in the third quarter.

OPPO and Vivo have always been strong in the offline space, while Huawei has its Honor brand focused on the online space, and Huawei branded phones focused on the offline space.

Xiaomi started out strong in the online space and has been trying to expand into the offline space. Other than increasing its number of Mi Home stores, it has also offered models with different storage space and colors in the offline channel to differentiate its models and better market its models to retailers. It also worked more closely with the operators in China to have deals with them. This helped Xiaomi develop a better relationship with its channel partners, which yielded steady sequential growth during the quarter.

Apple finally bounced back this quarter, with key activity being the launch of the iPhone 8 and 8 Plus. Apple's rebound shows there is still pent-up demand for iPhones in China, says IDC. The launch of the iPhone X is greatly anticipated in China, with market demand expected to be high, especially given how different it looks from previous versions.

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