Apple, once a dominant force in the Chinese smartphone market, has been edged out of the top five vendors in the second quarter of 2024. This shift was highlighted in a recent Canalys report, which revealed that the smartphone market in the country also clocked an annual growth of 10% for Q2 2024.
Apple’s market share in China has shrunk to 14% in the second quarter of 2024, a decrease from 15% in the first quarter and 16% during the same period in the previous year. This decline has resulted in Apple falling to the sixth position in the market, with approximately 9.7 million iPhone units shipped. This marks a significant drop from its previous status as the third-largest smartphone vendor in China during the same period last year. The country’s economy has also contributed to the slowdown in iPhone sales. IDC reported that iPhone shipments in China fell by 3.1% during the second quarter, while Android-powered competitors saw an 11% year-on-year rise. For the greater market, a total of 70.5 million units were shipped, reflecting a strong rebound.
The primary culprit behind Apple’s decline is the resurgence of domestic brands. Huawei, once a global titan before US sanctions, has made a spectacular comeback. Its new Pura 70 series, powered by domestically produced chips, has captivated the Chinese market. This resurgence, coupled with the steady growth of other domestic players like Vivo, Oppo, and Xiaomi, has created a formidable competitive environment.
These domestic brands have several advantages. They have a deep understanding of the Chinese consumer, tailoring their devices to local preferences. Moreover, their robust supply chains, often integrated with domestic component manufacturers, give them a cost advantage. This has enabled them to offer competitive pricing and feature-rich devices, making them increasingly attractive to Chinese consumers. The Canalys report also notes that this is the first quarter in history where domestic vendors have dominated all top five positions in the Chinese market.
“Chinese vendors’ strategies for high-end products and their deep collaboration with local supply chains are starting to pay off in hardware and software features. HONOR’s latest Magic V3, which leverages GenAI, has significantly enhanced the user experience of foldable devices. Conversely, Apple is facing a bottleneck in mainland China.,” Lucas Zhong, research analyst at Canalys, commented on the matter. “The vendor’s current channel strategy maintains a healthy inventory level and aims to stabilize retail prices and protect margins of channel partners. In the long term, the Chinese high-end market is ripe with opportunity. Local brands such as Huawei, HONOR, OPPO, and vivo are leading the way by incorporating technologies such as GenAI into products and services. Additionally, the localization of Apple’s Intelligence services in mainland China will be crucial in the next 12 months.”
Coming to the performance of the domestic brands, we find that Vivo reclaimed the top spot in the Chinese smartphone market, capturing a 19% market share with 13.1 million units shipped. This success was driven by strong offline and online sales during the “618” e-commerce festival. Oppo maintained its second-place position, shipping 11.3 million units, buoyed by the launch of its new Reno 12 series. Honor, a Huawei spinoff, came in third with 10.7 million units shipped, marking a 4% year-on-year increase.
Huawei made a notable comeback, securing the fourth spot with a 15% market share and 10.6 million units shipped. This resurgence can be attributed to the launch of its Mate 60 smartphone and other strategic initiatives. Xiaomi, benefiting from the buzz around its first electric car, the SU7, and solid sales of its K70 and flagship 14 series, re-entered the top five with a 17% year-on-year increase, shipping 10 million units.
