According to Canalys estimates, smartphone shipments in Mainland China experienced a 5% year-on-year decline, totaling 64.3 million units in Q2 2023. However, there are positive signs of recovery as vendors adapt to the evolving market dynamics.
In the highly competitive market, Vivo emerged as the top player with an 18% market share and 11.4 million shipments after effectively managing inventory levels and launching several new models. Following closely behind was OPPO (including OnePlus) with an 18% market share, driven by robust online performance and enhanced channel capabilities.
Apple secured the third position, shipping 10.4 million iPhones, closely trailed by HONOR with 10.3 million shipments. Xiaomi improved its market share to 13% and maintained its fifth-place position.
Canalys Analyst, Amber Liu, attributed the shifting consumer preferences to a willingness to invest in high-quality products. “The average selling price of smartphones exceeded US$450 last year and is expected to continue rising in the upcoming quarters. Apple and Huawei have witnessed impressive year-on-year growth with their flagship devices, indicating a sustained demand for high-end smartphones. Vendors are driven to invest in innovative products to stay ahead of the technological curve, and foldable phones like the HONOR Magic V2, vivo X Fold2, and Huawei Mate X3 have garnered significant interest from consumers and channels due to their new form factors and use cases.”
Toby Zhu, another Canalys Analyst, pointed out the importance of channel capabilities and operational efficiencies in the ever-changing macroeconomic environment. “Several vendors are expanding their offline coverage, which is anticipated to be a critical battleground in the upcoming quarters. OPPO is upgrading and developing its flagship stores, while HONOR is following suit after a significant channel shakeup last year. Distribution-led vendors are leveraging fulfillment distribution models to address existing channel issues, avoid inventory build-up, and minimize pricing conflicts.”
Looking ahead, Zhu emphasized the smartphone market in Mainland China is entering a new stage of competition, with expectations of a moderate recovery in the second half of 2023. Government-led incentives to boost consumer electronics demand in lower-tier cities and increased entry-level smartphone device subsidies by operators are anticipated to benefit local brands. Vendors are advised to mobilize resources for crucial product launches in the latter half of the year to capitalize on early signs of recovery and seize new opportunities in the evolving market.
