Apple’s market share is in the toilet as it barely scraped in as number five losing 31.7% YoY growth in the Chinese market in Q2, 2016. But almost every other major manufacturer had Apple for lunch and experienced amazing growth.
The question is can the iPhone 7 save its bacon in this huge market? We will have to wait for a few months to see.
International Data Corporation (IDC) has reported on the Q2, 2016 shipment volumes (ship-in) that are considered far more accurate than Kantar World Panel or other estimates.
Huawei came in at number one with 17.2% of the market. OPPO at number two with 16.2%, Vivo (like OPPO, a BBK company) at number three with 13.2%, Xiaomi at four with 9.5% and Apple in fifth with 7.8%. The remainder – 36.1% are from dozens of local and international manufacturers including Samsung.
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The chart below shows just how volatile and/or fickle the Chinese market can be. For example, OPPO has had a massive 124.1% YoY growth and its sibling Vivo 74.7% - between them they have 29.4% of the market seriously eclipsing Huawei at 17.2% – stay tuned for Q3 results.
“The success of Huawei, OPPO, and vivo in the market can be attributed to their concerted effort to build their brand and aggressive marketing to attract the consumers, along with the focus on product differentiation,” says Xiaohan Tay, Senior Market Analyst, Client Devices Research, IDC Asia/Pacific.
Some of the key highlights in the China smartphone market in Q2,2016 include:
Huawei focused on promoting P9, making it one of the key products for the quarter. It is marketing targeted consumers in search of a good camera through an emphasis on its Leica lens. It used social media well including actress Scarlet Johannsen and actor Henry Cavill (Superman) and that tactic worked and spread like wildfire through WeChat helping to gain consumer interest.
OPPO and Vivo continued to excel largely due to the strength of their offline channels, with branded shops and advertisements in most of Tier 3 to Tier 5 cities - a more convenient option for consumers to go to a physical shop to buy and for service. In Tier 1 and 2 cities, they continued their focus on sponsorships of key entertainment shows to win consumers over.
OPPO hired a few brand ambassadors to launch its R9 series prompting other vendors to follow suit after seeing their strong success. Vivo hired a famous Korean star who’s wildly popular in China as its brand ambassador. OPPO pushed its fast-charge technology along with its famous tagline ‘charge for 5 minutes to be able to talk on the phone for 2 hours’ and focused on camera/selfie features when promoting its latest R9.
Xiaomi hired three different ambassadors for its Redmi line targeting the younger crowd. While having brand ambassadors is not a new phenomenon in China, vendors seem to be more aggressive with their marketing strategies. This is a new tactic for Xiaomi that never used to spend on advertising.
Apple continued its steep decline. The iPhone SE was not a hit in China, where consumers prefer larger screen-sized phones – in Q2 90% of phones shipped in China were 5 inches or more.
The market is saturated and driven mainly by replacement users, so vendors must be aggressive with their marketing tactics, experimenting with new ways to win over consumers.
“Hiring celebrity endorsers may help increase numbers in the short-term, but this alone may not be sufficient to drive numbers in the long run. As there is very little differentiation across products to warrant significant brand loyalty, vendors must constantly think out of the box to get people hyped up about their products,” ends Tay.