In recent months, several research institutions have released their Q2 shipment reports for the Chinese mobile phone market. A few days ago, IDC and Counterpoint released their report for the Chinese mobile phone market for Q2 2024. These reports reveal a major shift in market dynamics, with Apple showing a notable decline in shipments. Meanwhile, Chinese brands like vivo, OPPO, Honor, Huawei, and Xiaomi have shown strong performance, with Huawei leading the charge.
Apple Market Decline
A report by market research firm Canalys shows a sharp decline in Apple’s shipments in the Chinese market during the second quarter of this year. Apple’s fall from the top five marks a major shift in market share. Despite efforts to boost demand through huge price cuts, Apple’s iOS market shipments still fell by 3.1% year-on-year (YoY). This decline shows the intense rivalry Apple faces from Chinese brands.
Canalys Research Manager Amber Liu said
“The Chinese market is finally aligning with global recovery speeds,”.. “This was largely driven by the supply side, which leverages nationwide sales events such as ‘618’… vendors with a comprehensive smart device portfolio, such as Huawei and Xiaomi, are enhancing their offline channel advantage by expanding their channel partners and promoting the up-sell and cross-sell of products within their smart device ecosystems.”
Lucas Zhong, Canalys Research Analyst adds
“It is the first quarter in history that domestic vendors dominate all the top five positions … 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 … Conversely, Apple is facing a bottleneck in mainland China. The vendor’s current channel strategy maintains a healthy inventory level and aims to stabilize retail prices and protect margins of channel partners … the localization of Apple’s Intelligence services in mainland China will be crucial in the next 12 months.”
Canalys Senior Analyst Toby Zhu further said
“…the market will be closely watching Huawei’s upcoming launch of HarmonyOS Next, as the vendor aims to position it as a third major mobile OS alongside Android and iOS…”
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The Rise of Chinese Brands
In contrast to Apple’s struggles, Chinese brands have shown good growth. According to Canalys, vivo, OPPO, Honor, Huawei, and Xiaomi now occupy the top five spots in the Chinese mobile phone market. Among these, Huawei stands out with a YoY growth rate of over 40%. This surge is a prove to Huawei’s successful strategies in taking market share, mostly in the high-end segment.
IDC Report Insights
The latest quarterly tracking report from research firm IDC echoes the findings of Canalys. The IDC report reveals that the Android market in China grew by 11.1% YoY in the second quarter of 2024, driven by strong performances from vivo, Huawei, and Xiaomi. This growth contrasts sharply with the decline in Apple’s shipments, showing the edge of Android brands in the current market.
Seesaw Effect
Analysts attribute the decline in Apple’s market share to the rapid rise of Huawei phones. The so-called “seesaw effect” shows that as Huawei gains traction, Apple loses ground. This trend is mostly evident in the high-end mobile phone segment, where Huawei has attracted a good number of former Apple users. Huawei’s ability to compete with Apple on quality and innovation has resonated well with users in China.
The point above was made by Amber Liu, Canalys research manager. Amber Liu noted that the Chinese market is facing a major recovery driven by Chinese vendors, mainly Huawei, which is now back at the top in the market after a long time out.
In the high-end mobile phone market, mostly for devices priced above RMB 4,000 ($550), Huawei has emerged as a major player within the Android camp. This segment is crucial for mobile phone brands, as it typically offers higher profit margins and brand prestige. Huawei’s success in this category reflects its strong brand image and ability to deliver premium features and performance that appeal to discerning users.
Conclusion
The second-quarter shipment reports for the Chinese mobile phone market reveal a major shift in market dynamics. Apple’s decline is marked by a drop in shipments and a fall from the top five. It contrasts sharply with the strong performance of domestic brands like vivo, OPPO, Honor, Huawei, and Xiaomi. Huawei’s impressive growth, driven by its success in the high-end segment, underscores the intense competition Apple faces in China. As the market continues to evolve, it will be interesting to see how Apple responds to these challenges and whether it can regain its lost ground.
