China Smartphone Units Drop by 6% YoY while Average Selling Prices Grow by 15% in 2Q18, IDC Reports

According to preliminary data of the IDC Quarterly Mobile Phone Tracker, the Chinese smartphone market shipped 105 million units during the second quarter of 2018, resulting in a 5.9% year-over-year (YoY) decline. However, the pace of decline has narrowed compared to 1Q18 as channel activity normalized and new products were marketed.

IDC China’s Senior Market Analyst Xi Wang said, “The market’s average selling price (ASP) increased 15% YoY in the second quarter. This suggests that consumers are willing to pay more for a phone targeted for their needs, including not just better cameras but also emerging categories such as gaming. Time spent on mobile phones continues to rise, and vendors should emphasize aspects like industrial design, quality, and brand image to drive replacements in this market.”

IDC believes that market leaders in China’s smartphone market will continue to gain more share, marginalizing smaller players in the process. Large vendors have been transforming from a single-channel and single-segment focus to a multi-channel and multi-segment focus. Their heavy investments here make it more difficult for a smaller player to compete.

Vendor highlights:

• Huawei continued to lead the Chinese smartphone market in the second quarter with a 27.2% market share. Huawei cemented its position in the US$600 to <US$800 price segment with the P20 Pro series, while Apple moved to even higher price bands, helping Huawei build a high profile during the offseason. Moreover, its “GPU Turbo” technology resonated with users, while China’s 6.18 online promotions led to strong sales for Honor.

• OPPO and vivo maintained their positions while optimizing their channels and releasing thin-bezel models, the OPPO Find X and vivo NEX. Marketing activities during the World Cup increased store traffic and interest for both brands.

• Xiaomi maintained its value-for-money approach with dual-camera models priced at less than RMB 1,000 (~USD150). But its new models also helped increase the company’s average selling price (ASP) by 21% YoY, which is the highest among the top 5 vendors in China.

• Apple fell YoY given that the high prices of its products kept it out of reach of many users. Nonetheless, the Apple brand name is still very strong in China, and we believe that the company will fare well should it release slightly cheaper options later in the year.

IDC expects a relatively flat market for China in full year 2018, although exchange rates and trade wars are downside risks to watch out for going into the second half. – CT Bureau