China smartphone market falls 5% in Q2 2023, vivo tops charts

According to Canalys estimates, smartphone shipments in Mainland China fell by 5% year on year to 64.3 million units in Q2 2023. After taking control of inventory levels, vivo retook first place with an 18% market share and 11.4 million shipments, helped by several new launches. OPPO (including OnePlus) followed closely with an 18% market share, driven by solid online performance and improved channel capabilities. Apple took third with 10.4 million iPhones shipped, followed closely by HONOR, with 10.3 million shipments. Xiaomi improved its market share sequentially to 13% and held on to fifth place.

“Chinese consumers are increasingly willing to pay for high-quality products,” said Canalys Analyst Amber Liu. “The average selling price of smartphones exceeded US$450 last year and is expected to keep rising in the coming quarters. Apple and Huawei have achieved impressive year-on-year growth with their flagship devices, indicating solid and sustained high-end demand. Vendors benefiting from consumer product upgrades are motivated to invest in more product innovations to stay ahead of the technology curve. The recently launched foldable phones, such as the HONOR Magic V2, vivo X Fold2 and Huawei Mate X3, have ignited significant interest from channels and consumers around new form factors and use cases.”

“Vendors are looking to improve their channel capabilities and operational efficiencies in a continuously challenging macroeconomic environment,” said Canalys Analyst Toby Zhu. “A few vendors are expanding offline coverage, which will become a key battlefield in the coming quarters. OPPO is upgrading and developing its flagship stores while HONOR is following suit after a major channel shakeup last year. Distribution-led vendors are leveraging fulfillment distribution models to address existing channel issues and avoid inventory build-up and pricing conflicts.”

“The smartphone market in Mainland China is entering a new stage of competition,” said Zhu. “The market will likely recover moderately in the second half of 2023. Government-led incentives should encourage demand for consumer electronics in lower-tier cities while operators increase entry-level smartphone device subsidies, benefiting local brands. As local market sentiments gradually improve, vendors must start mobilizing resources for important product launches in the second half of the year to take advantage of early signs of recovery.”

Canalys