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Chinese Smartphone Sales Collapse In “Biggest Decline Ever”

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Smartphone shipments in China experienced their most significant decline ever in Q1 2018, crashing more than 21 percent annually to 91 million units, according to the Singapore-based research firm Canalys. Since 2013, Chinese smartphone shipments have far exceeded 100 million units quarterly. The last time the headline number fell below the 100 million unit benchmark was Q4 2013.

According to the report, published Thursday and which echoed a similar recent finding by the IMF, the eight-year-long smartphone bubble has come to an end in yet another warning sign of the ongoing demise of the “synchronized global growth” narrative.

To wit, eight of the top ten smartphone vendors experienced a significant decline in sales. Apple lost considerable ground in China, as it was removed from the number four vendor spot by local brand Xiaomi, which bucked the trend and saw 37 percent growth in shipments to 12 million units sold.

“Xiaomi was the only company to buck the trend, growing shipments by 37 percent to 12 million units, and overtaking Apple to take fourth place.”

Huawei (including Honor) managed to remain in the top vendor spot with shipments increasing by 2 percent, while “maintaining its lead and consolidating its market share to about 24 percent by shipping over 21 million smartphones,” said Canalys.

The report detailed how China’s smartphone segment is becoming increasingly dominated by four domestic vendors, including Huawei, Oppo, Vivo, and Xiaomi, which accounted for more than 73 percent of Chinese shipments in Q1 2018.

Ahead of the Apple’s earnings report on May 1, Canalys’ report about Apple’s dwindling market share in China could be a bad omen.

What’s worse for the consumer-tech giant, the Canalys data corroborates a report from Bloomberg, which revealed how five of its largest device assemblers reported a sharp slowdown after peaking in the second half of 2017. Nevertheless, the peak coincides with Canalys’ report of crashing smartphone sales in China.

Meanwhile, vendors outside the top five spots, including Apple (sixth spot), saw their market share slide to 19 percent in the prior quarter, a sign that there could be some market-share consolidation in the offing, according to the report.

“The costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope,” said Mo Jia, an analyst at Canalys.

“While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking market, they can take comfort from the fact that it will continue to consolidate,” he added.

One reason for the decline could be smartphone makers focus on the high-end market. As Canalys Research Analyst Hattie He said, “Xiaomi is the only vendor in the top-5 that is focused on the sub-RMB1,000 (about $160) price segment.” Xiaomi posted double-digit growth, with sales up 37 percent, partly reflecting a lackluster performance in 2017. Xiaomi’s success is contributed to its low-cost devices.

The inventory issues that Oppo and Vivo experienced in the fourth and first quarters “are now behind them,” said Jia.

“New smartphones will definitely entice people to upgrade, but vendors are more careful of avoiding oversupply in the channel,” he said, adding that the smartphone market “could experince a short period of stagnancy” as vendors resort to device improvements rather than broad marketing campaigns.

To sum up, the tech sector’s importance to Asia’s economy remains paramount. Which is why collapsing smartphone sales in China could have a serious impact on the “synchronized global growth” narrative that has dominated economic analysis in recent years. At least, that was essentially the IMF’s view when it pointed out that the recent peak in global smartphone sales could seriously hamper growth in Asia, where supply chains and economies have been transformed by the smartphone boom.

All of this begs the question: will falling smartphone sales be the canary in the coalmine as the “global growth” narrative downshifts into recession?


Source: http://silveristhenew.com/2018/04/27/chinese-smartphone-sales-collapse-in-biggest-decline-ever/


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