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Xiaomi looks to Africa as China’s smartphone market falls

Milcah Lukhanyu by Milcah Lukhanyu
2 years ago
in Business
12 min read
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Xiaomi moved the selfie camera to the bottom of the screen on the Mi Mix 2 but still, body ratio was 83.6%.

Xiaomi moved the selfie camera to the bottom of the screen on the Mi Mix 2 but still, body ratio was 83.6%.

China’s smartphone market fell 14% in 2018, with just under 400 million units shipped and Xiaomi has failed to grow in China but rapidly growing in overseas markets.

“Xiaomi tried to increase its average selling price in China. It has decided to make Redmi an independent sub-brand designed to directly compete with Honor. Xiaomi’s challenge in 2019 will be to accurately position the two brands, in terms of product, pricing and channels, so that they complement and do not cannibalize one another. If each brand can redefine its positioning well, each will achieve greater market share in 2019,”
said Yiting Guan, a Research Analyst at Canalys.

Due to that the firm is set to launch its new arm in Africa to double down its smartphone sales since its first launch on the continent in 2015. By launching in Africa, Xiaomi will take on other Chinese smartphone markers such as Transsion which is known for cheap smartphone brands TECNO, infinix and Itel. Transsion is now the biggest vendor in Africa with some 35.4 percent market share according to IDC.

Xiami’s Redmi brand which retails for a round $150 across several markets in Africa is likely the manufacturers’ brand of choice for Africa as the firm moves to take on other smartphone brands in the same price range.

According to research firm Canalys, “In 2018, smartphone shipments in China fell to their lowest level since 2013, at 396 million units. The natural slowdown as consumers keep their smartphones for longer is one factor, but it has been amplified considerably by the economic slowdown in China and consumers’ weakened purchasing power.”

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The firm adds that the latest quarter, Q4 2018, marked a 15% year-on-year drop, and the seventh consecutive quarter of decline.

As shipments tumble, the market is rapidly consolidating. The top five smartphone vendors’ market share has increased from 73% in 2017 to 88% in 2018. Among them, Huawei and Vivo bucked the overall market decline, and grew 16% and 9% respectively. Oppo managed to hold onto second place, falling 2% but growing market share.

Xiaomi ranked fourth, as a disappointing second half caused its full-year shipments to fall by 6%. Apple stayed in fifth place with a 13% decline in 2018. It still out-performed the market, but this was the worst growth rate in the top five, and Apple’s third consecutive year of shipment decline in China.


Huawei achieved a record market share of 27% in 2018, with 105 million shipments.

“Huawei has penetrated the high-end with technological innovations, and a strengthening brand, which has helped it markedly extend its lead in China,” said Mo Jia, an Analyst based in Canalys’ Shanghai Office. “Its dual-brand strategy has been a huge success, with sub-brand Honor helping it cover a broad range of price bands. China continues to be a strong foundation for Huawei, and its launchpad for overseas expansion as Huawei aims to challenge Samsung for global leadership in 2019.”

Apple had the toughest year of the top five, with shipments falling 13%, as customers were deterred by the high pricing of its new iPhone. In addition, models such as iPhone 7 and 8 did not see significant uplift in China, even after prices were lowered after the launch of the iPhone XS.

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“Apple has several challenges in China, and the growing power of competitors is not actually its biggest,” said Jia. “As its services division becomes more important in China, it is vital for Apple to maintain or grow its installed base of iOS users. Apple must re-examine its China strategy, and find a way to revive its high-end brand imagine, in order to align with the purchasing behavior of local middle-class and upper-class demographics.”

Leading manufacturers will have even less breathing space in 2019, as Canalys expects the Chinese smartphone market to fall by 3% to 385 million units. Amid these conditions, 2019 will mark the beginning of the 5G era in China, as manufacturers prepare to release 5G devices and operators start to roll out their commercial 5G networks.

Consumption in China is shifting toward high-end and higher quality. As a result, the average selling price of smartphones is expected to exceed US$400 in 2021. Competition in the upper mid-range and high-end segments will intensify, and vendors must focus on bringing the latest technology to consumers to justify higher price points.

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Milcah Lukhanyu

Milcah Lukhanyu

Milcah Lukhanyu covers daily news briefs at TechMoran. She is the person who will probably read your press release and get the story out of it or totally trash it. Send tips to [email protected]

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