China's smartphone market suffers first-ever annual decline

Updated 2018-01-30 13:25:01

(ECNS) -- Chinese smartphone shipments fell 4 percent in 2017, revealing a worse-than-expected growth story for the world's largest smartphone market.

Annual shipments dropped to 459 million units and the fourth quarter recorded the worst year-on-year performance, with shipments plummeting by more than 14 percent to just under 113 million units, according to Singapore-based market research firm Canalys.

Canalys research analyst Mo Jia said the decline pace in China's smartphone market was worse than expected, China Business Network reported.

Smartphone makers like Meizu saw a clear fall while Coolpad and Le became marginalized in the market, according to Jia. Although the top five vendors will cement their market positions and attempt to squeeze out smaller competitors this year, they still face pressure to improve shipments.

Huawei witnessed its best-ever quarter in its home market and shipped more than 24 million smartphones in the fourth quarter to reach a total of 90 million in 2017. Oppo took the largest shipment with nearly 80 million units in 2016, but it also forecast "a slight growth" this year.

Wu Qiang, the vice president of OPPO, said the key is survival rather than growth during the market slowdown. Wu also said the smartphone's growth fell due to a lack of technical innovation for at least the last half of the year.

Smartphone makers showed resilience in the second quarter when the decline was recorded for the first time. Oppo and Vivo moved further into the middle and high-end market, while Gionee still hoped to make 100 million units over two to three years. But in less than a year, the market slowdown forced vendors to rethink their strategies and lower expectations.

OPPO has opened its first flagship store in China's economic powerhouse Shanghai, changed employee performance evaluation processes, and is encouraging improved interaction with consumers. Vivo's founder Shen We has vowed to continue investment in technical innovation as a solution. While Huawei has bet on AI, Xiaomi will focus on the international market.

Jia said the stage for consumers to upgrade to entry-level smartphones had come to an end and their willingness to change existing phones had also fallen due to the extended lifecycle of the devices. Canalys portrayed a stagnant growth of China's smartphones before 5G became popular.

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