After six consecutive quarters of growth, Chinese smartphone shipments fell 3% to 113 million in Q2 2017. Huawei shipped over 23 million to lead the market for the second quarter in a row. Oppo shipped just over 21 million and had to settle for second place, despite growing 37% year on year. Vivo held onto third place, shipping just over 16 million, losing ground on the leading pair during the quarter.
Xiaomi was the standout vendor as it overtook Apple to take fourth place. It shipped just under 15 million smartphones in China, up more than 60% sequentially. “Xiaomi still offers the best value in the Chinese market, and it remains the preferred choice for price-conscious consumers. The online channel continues to be a key route to market for Xiaomi and this quarter saw it take the lead in the 618 online sales events across online retail platforms, such as JD.com and Tmall,” said Canalys Research Analyst Lucio Chen. “Redmi has had strong uptake in the mid-tier, going head to head with Oppo’s A series and Vivo’s Y series. Xiaomi’s growing network of ‘experience stores’ will pose a threat to Oppo’s and Vivo’s offline dominance, while showcasing the design and build quality of its devices.”
Five of the ten leading vendors, including Apple, Samsung and Meizu, suffered annual shipment declines this quarter. “China’s smartphone market continues to consolidate. The top five brands accounted for almost three quarters of shipments, with the top four all growing and adding 10% to their cumulative share compared with the same quarter a year ago. Adopting a diverse channel strategy is key to success in China, as competition has intensified in online and offline channels, resulting in many vendors losing market share quickly,” said Canalys Research Analyst Hattie He. “Huawei and Xiaomi have strong online brands, and are now rapidly growing their offline channels. Oppo and Vivo face greater pressure on their mid-range from Redmi and Honor. The failure to establish online channels will slow the momentum of these rising stars.”
The Indian smartphone market contracted for the first time in its history, as shipments to the country fell 4% year on year to just under 27 million units in Q2 2017. Samsung continues to lead the market, with a 25% share, followed by Xiaomi, which more than quadrupled its shipments to 4.8 million units this quarter. Vivo took third place, shipping an all-time high of 3.4 million units, owing to its rising popularity among tier-two and tier-three cities. Oppo displaced Lenovo to take fourth place, while Lenovo finished fifth with 1.9 million smartphones.
“With China suffering its own decline this quarter, India is a market of huge strategic importance to Chinese smartphone vendors,” said Canalys Research Analyst Ishan Dutt. “Samsung is under immense pressure in the mid-tier from the Chinese players. For now, its low-end J Series is helping it sustain its lead and maintain share. But it needs to use its brand to make its mid-tier devices more desirable. The recently launched S8 and S8+ have helped it win back some of its premium share. It now needs to generate a halo affect around these products in the mid-tier to counteract the threat from China.” Collectively, Xiaomi, Oppo, Vivo, Gionee and Lenovo control over 50% of India’s smartphone market.
The Goods and Services Tax (GST), applicable in India from 1 July 2017 across all products and services, has adversely affected the market this quarter. “There is general confusion in the entire market over GST and a lack of awareness about the changes that are needed. Apprehension among distributors and retailers regarding the impact on prices has caused the market to adopt a wait-and-see policy,” said Canalys Analyst Rushabh Doshi. “The market will emerge stronger post-GST. Vendors can look forward to leaner distribution, faster delivery and increased demand from local retailers and distributors.”
Smartphone quarterly estimate and forecast data is taken from Canalys’ Smartphone Analysis service.
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