Xiaomi bucks trend as China smartphone market dips in Q1

In a quarter when the China smartphone market experienced it biggest ever decline, Xiaomi bucked the trend and grew 37 percent to 12 million units, according to Canalys.

Market leader Huawei inched up two percent to snag a 24 percent share in Q1. The other eight of the top 10 brands headed south with Gionee, Meizu and Samsung recording less than half of Q1 last year’s numbers. Second-placed Oppo and third-placed Vivo bore the brunt of the overall decline, with shipments falling by about 10 percent to 18 million and 15 million respectively.

The top four vendors, Huawei, Oppo, Vivo, and Xiaomi, together accounted for more than 73 percent of shipment in China.

“The level of competition has forced every vendor to imitate the others’ product portfolios and go-to-market strategies. But the costs of marketing and channel management in a country as big as China are huge, and only vendors that have reached a certain size can cope. While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players,” said Mo Jia, Research Analyst of Canalys.

Xiaomi’s growth could be attributed to a lacklustre 2017. Nonetheless, the growth is noteworthy given the pace at which Xiaomi is also growing overseas.

“Xiaomi is the only vendor in the top five that is focused on the sub-RMB1,000 (about US$160) price segment and it owes close to 90 percent of its shipment to Redmi. But the vendor is struggling to shed its low-cost image,” said Hattie He, Research Analyst of Canalys.

“The launch of the Mi Mix 2S in Paris and the very recent Mi 6X in Wuhan are clear efforts by the company to change customers’ perception of the brand, especially in China, where Xiaomi needs to tempt those looking at Honor, Oppo or Vivo to buy its products,” He added.

After successive falls in the last two quarters, China is expected to return to growth in Q2, as Oppo, Vivo and Huawei launch new flagship devices and hope to excite the market once again.

“The inventory issues that Oppo and Vivo suffered in Q4 and Q1 are now behind them. New smartphones will definitely entice people to upgrade, but vendors are more careful of avoiding oversupply in the channel. China’s smartphone market may see a short period of stagnancy as vendors refocus on research and development, relying on new use cases to excite refreshes rather than spending heavily on the channel and marketing,” said Jia.