Chinese Smartphone Market Declines For First Time

The smartphone market declined for the first time ever in 2017, with shipments dropping 4 percent year-over-year, according to market research firm Canalys.

The BBC, citing data from Canalys, reported that the decline marks the end of an eight-year period of growth in China’s smartphone market. China is still the world’s largest smartphone market, noted the report.

Mo Jia, a research analyst at Canalys, told the BBC that consumers have already upgraded from basic phones to entry-level smartphones, and don’t think they need pricier handsets. “The phones they have now are already good enough,” said Jia. “We say that it’s gone from a ‘change’ market to a ‘stop’ market.”

Chinese manufacturers pack a lot of technology into entry-level phones, resulting in a longer average life cycle of 26.8 months. Canalys predicted the Chinese smartphone market will remain static until 5G devices start rolling out in the country in 2019.

Despite the dip in smartphone sales, Huawei, China’s leading handset maker, was able to lodge double-digit gains in 2017.

Canalys predicted that Huawei, Oppo and Vivo will have to look outside the China market for future growth, saying that global expansion will be critical to their future success. They may face an uphill battle in the U.S., where lawmakers view Chinese smartphone makers with skepticism.

“Oppo and Vivo are trying to expand into more countries like Russia and Japan, and they’re trying to deepen their market in South East Asia,” Jia told the BBC. “Xiaomi is doing very well in India. They are the most popular brand there and are seeking to open more stores. They are also expanding into Thailand.” As for Huawei, he said the company is targeting budget smartphones that are priced lower than entry-level and mid-level smartphones.