Global smartphone sales stagnate as growth in China slows

Smartphones shipments grew by a mere 0.2 percent to reach 334.9 million units globally in the first quarter of 2016 as compared to the same period in 2015, making it the smallest year-on-year growth on record.

The Worldwide Quarterly Mobile Phone Tracker report, released from the International Data Corporation (IDC) yesterday, attributed the minimal growth to reasons such as saturation in developed markets and a year-on-year decline from industry leaders Apple and Samsung.

As the biggest smartphone market in the world, slow growth in China contributed to global slowdown. Year-on-year smartphone shipment growth in China fell dramatically from 62.5% in 2013 to 2.5% last year, according to the report.

As China’s market matures, consumers are gravitating towards more expensive phones, says IDC, with the average selling price of smartphones in China rising from USD 207 in 2013 to USD 257 in 2015.

Tay Xiaohan, a Senior Market Analyst at IDC, told AllChinaTech that most Chinese smartphone companies are trying to move upstream, and increase the average selling price of their products.

She mentioned that users replacing their smartphones seek a better experience, so they are generally willing to pay more.

In the saturated Chinese market, even international smartphone vendors are struggling. Apple’s sales in the greater China area decreased 26% year-on-year in the second quarter of 2016, affecting its overall performance. Globally, iPhone shipments have dropped year-on-year for the first time.

According to Tay, the global smartphone market is facing a stagnant lull because of the slowdown in China as well as countries like the United States.

Tay said that a focus on emerging countries like India and Central and Eastern Europe could possibly improve the situation.

“We’ll see growth from this region, but it might not propel growth in the global market,” she said.

A surprising change in the global market was the entrance of Chinese-brands OPPO and Vivo, which replaced previous fourth and fifth ranking brands Lenovo and Xiaomi.

According to Tay, OPPO and Vivo were able to break into the top 5 ranking due to high shipment numbers in China and their strong retail strategies in the lower tier cities, where many of OPPO and Vivo’s brick-and-mortar shops can be found.

Tay said that these two companies spent a lot on marketing in order to increase their brand awareness overseas, especially in the Southeast Asia region.

Melissa Chau, senior research manager with IDC, said in the report that these new players are poised for a strong growth in 2016 as they are able to create products that serve the needs of the “increasingly sophisticated consumers.”

However, she added a word of caution to the new players.

“These new vendors would be well-advised not to rest on their laurels though, as this dynamic smartphone landscape has shown to even cult brands like Xiaomi that customer loyalty is difficult to consistently maintain,” she said.

With contributions from Danielle Li

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