Table of Contents
Executive Summary
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- The market
- A slow growth, and estimated to continue
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- Figure 1: Volume sales of mobile phones in China, 2011-21
- Premiumisation fuels market growth, and offline channels remain important
- Companies and brands
- Huawei leads volume share, followed by OPPO and Vivo
- Xiaomi, Apple and Samsung face challenges
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- Figure 2: Leading mobile phone brands in China, by volume share, 2015-16
- The consumer
- Huawei enjoys increase among tier one, two and three cities
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- Figure 3: Brands of current smartphones and ranking change, October 2016 and November 2016
- Purchase intention dropped in 2016
- Mid earners and lower tier cities should be the focus to attract purchase
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- Figure 4: Smartphone purchase intention in the next 6 months, October 2015 and November 2016
- Huawei continues to win consumers’ favour
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- Figure 5: Intended smartphone brands, October 2014, October 2015 and November 2016
- The less expensive current smartphones, the higher upgrade degree
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- Figure 6: Price range of current smartphones and future purchase budget, November 2016.
- Product rather than brand driven
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- Figure 7: Smartphone purchase motivation, November 2016.
- Both online and offline channels are important, but play different roles
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- Figure 8: Attitudes towards online and offline channels for mobile phone purchase, November 2016
- Always going for the latest models
- What we think
Issues and Insights
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- Online and offline channels play different roles
- The facts
- The implications
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- Figure 9: Xiaomi Home, Shanghai, February 2016
- Attracting purchases in the saturated smartphone market
- The facts
- The implications
- Brands should enrich their product portfolios
- The facts
- The implications
The Market – What You Need to Know
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- Mobile phone market grows slowly yet steadily
- Premiumisation drives market value growth
- Smartphone growth slows down, as does 4G mobile phone growth
Market Size and Forecast
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- Mobile phone market maintained slow yet steady growth in 2016
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- Figure 10: Volume sales of mobile phones in China, 2011-16
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- Figure 11: Value sales of mobile phones in China, 2011-16
- Mobile phone market estimated to continue steady growth with slight acceleration
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- Figure 12: Volume sales of mobile phones in China, 2011-21
Market Factors
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- Consumers trading up to premium smartphones fuels market value growth
- Offline channels remain important
- 4G transition is no longer a key growth driver
Market Segmentation
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- 4G devices make 96% of total mobile phone volume, but no longer a key driver
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- Figure 13: Volume sales of smartphones and non-smartphones in China, 2011-16
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- Figure 14: Volume sales of 2G, 3G and 4G mobile phones in China, 2014-16
Key Players – What You Need to Know
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- Huawei, OPPO and Vivo won in 2016, while Xiaomi, Apple and Samsung lost share
- Brands are offering premium models
- Opening bricks-and-mortar stores in lower tier markets, and leveraging the power of celebrities
- Innovative screen design and limited/special edition to increase appeal
Market Share
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- Huawei is the biggest winner in 2016, followed by OPPO and Vivo
- Xiaomi, Apple and Samsung losing volume share
- Fewer product lines, more specific target audience
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- Figure 15: Leading mobile phone brands in China, by volume share, 2015-16
- A more concentrated smartphone market, in terms of value sales
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- Figure 16: Leading mobile phone brands in China, by value share, 2015-16
Competitive Strategies
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- Offering premium models to satisfy consumers’ evolving needs
- Bricks-and-mortar stores winning in lower tier markets
- Continuing the power of celebrity endorsement
- Enriching product portfolio for new growth or spreading the risk
Who’s Innovating?
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- Differentiating screen design to increase appeal
- Limited or special editions to attract sophisticated consumers
The Consumer – What You Need to Know
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- Domestic brands dominate with Huawei taking the lead
- Purchase intention sees decline, while lower tier markets show potential
- Huawei expected to strengthen advantage
- Consumers show potential to upgrade their smartphones
- Function and design upgrade can motivate purchase
- Online and offline purchase channels both appeal, while consumers trust online information more
- About half of buyers would always choose the latest models
Current Smartphone Brands
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- Huawei ranking up and Xiaomi faces challenge
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- Figure 17: Ranking comparison of top 5 smartphone brands, October 2015 and November 2016
- Domestic brands dominate
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- Figure 18: Brands of current smartphones, November 2016
Purchase Intention
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- A drop in purchase intention
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- Figure 19: Smartphone purchase intention in the next 6 months, October 2015 and November 2016
- Who are likely to buy smartphones?
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- Figure 20: Smartphone purchase intention in the next 6 months, by personal income and city tier, October 2015 and November 2016
- No big difference by brand owners
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- Figure 21: Smartphone purchase intention in the next 6 months, by current smartphone brand, November 2016
Intended Brands
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- Apple and Samsung are losing appeal, while Huawei is biggest winner
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- Figure 22: Intended smartphone brands, October 2014, October 2015 and November 2016
- Brand loyalty is relatively low
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- Figure 23: Loyal users of leading brands, October 2015 and November 2016
Smartphone Price Range
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- Average spending and budget for future purchase reduce …
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- Figure 24: Average price of current smartphones and future purchase budget, October 2014 and November 2016.
- … yet consumers still want to upgrade their smartphones
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- Figure 25: Price range of current smartphone and future purchase budget, November 2016.
- 20-24-year-olds show strong upgrade potential
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- Figure 26: Average price of current smartphone and future purchase budget, by demographics, November 2016.
Smartphone Purchase Motivation
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- New function and appearance drive purchase
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- Figure 27: Smartphone purchase motivation, November 2016.
- Trade-in programmes can attract those who have not made up their mind
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- Figure 28: Smartphone purchase motivation, by purchase intention in the next 6 months, November 2016.
- Appearance and design is important to attract the 20s, while WOM reputation matters to 30s and 40s
- Special/limited editions still attract high earners
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- Figure 29: Smartphone purchase motivation, by age and personal income, November 2016.
Attitudes towards Mobile Phone Purchase
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- Online versus offline channels
- Not an either/or question
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- Figure 30: Attitudes towards online and offline channels for mobile phone purchase, November 2016
- Xiaomi users prefer buying mobile phones online, while Huawei users do not show specific preference
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- Figure 31: Attitudes towards online or offline channels, by demographics, November 2016
- When to buy a new phone
- Most consumers do not wait until their phone breaks to get a new one
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- Figure 32: Attitudes towards mobile phone purchase, November 2016
- 30s are an important target group
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- Figure 33: Attitudes towards mobile phone purchase, November 2016
- Accessories or not
- Accessories can be an added-value feature to increase appeal
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- Figure 34: Attitudes towards mobile phone accessories, by demographics, November 2016
Meet the Mintropolitans
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- Mintropolitans prefer Huawei and Apple
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- Figure 35: Current smartphone brands, by consumer classification, November 2016
- Greater drop of purchase intention among Mintropolitans
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- Figure 36: Smartphone purchase intention in the next 6 months, by consumer classification, November 2016
- Non-Mintropolitans show higher upgrade rate
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- Figure 37: Average price of current smartphone and future purchase budget, by consumer classification, November 2016
- Adopting latest technology and modular design appeals to Mintropolitans
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- Figure 38: Smartphone purchase motivation, by consumer classification, November 2016
- Online and offline channels are both important
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- Figure 39: Attitudes towards mobile phone purchase, by consumer classification, November 2016
Appendix – Market Size and Forecast
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- Detailed market size and forecast table
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- Figure 40: Volume sales of mobile phone market in China, 2011-21
- Figure 41: Value sales of mobile phone market in China, 2011-16
Appendix – Market Segmentation
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- Detailed market segmentation table
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- Figure 42: Volume sales of mobile phone market in China, by market segment, 2011-16
Appendix – Methodology and Abbreviations
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- Methodology
- Fan chart forecast
- Abbreviations
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