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Monday, 16 October 2017

China handset market slowing, maturing

Global mobile phone growth has fallen since 2015 and will continue to slow in future. Speaking at the Huawei 2017 Sino-foreign Media Exchange Conference in Beijing, China Qingkai Zong, Senior Industry Analyst, GfK China Telecom Division said that the growth forecast for mobile phones is 4% in 2018, against the heydays of 57% growth in 2012.

In 2016 1.4 billion smartphones were sold, a year-on-year (YoY) growth of 6%, and 0.4 billion mobile phones. In 2017, forecast figures are for 1.5 billion smartphones to be sold globally, a growth of 5% YoY. Mobile phone sales remain steady globally at 0.4 billion units sold. By 2018, Gfk expects 1.5 billion units of smartphones to be sold worldwide, a 4% YoY growth, and 0.3 billion units sold. "The market is stabilising; profits are gone," he said.

Slow growth is expected in the Asia Pacific region (APAC) between 2016 and 2017. China market demand for mobile handsets will grow 2.5%, and 2.85% in APAC excluding China. In contrast the Middle East and Africa market for mobile handsets will shrink 3.5% over the same period.

In China the market trend is for upgrades in the mid-high end range, Zong added. Gfk defines the premium price band as phones which cost the more than RMB4,000, and the low end as phones which cost between RMB2,000 and RMB3,000. The company's prediction is for flagship products to feature larger screens and dual cameras as standard, and that flagship model volumes to grow in 2H17. A number of units have recently launched near or in the fourth quarter, including Note 8, iPhone 8 and iPhone X, and the Huawei Mate 10.

The China handset market is dominated by a handful of big brands. As of mid-July 2017 Huawei is the No. 1 mobile brand in China with 25% share, followed by OPPO with about 18% share and VIVO with about 15% share. Xiaomi in 4th place has 12% share. The rest of the top 10 list in China include Apple, Meizu, Gionee, Samsung, Lephone and Coolpad.

Key handset feature trends as of 1H17 include:
  • Main display size of 5"-5.5” 
  • Flagship upgrades to fingerprint authentication, as well as biometric support for iris and voice recognition 
  • Near field communications support for payments, such as Apple Pay and Huawei Pay
  • Storage of over 128GB 
Hashtag: #华为OPENDAY

Note: This report stems from a Huawei-hosted visit to China. The company sponsored accommodation and travel costs.

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