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Top 3 China Smartphone Vendors Take Combined 47% Total Market Share

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According to the latest International Data Corporation (IDC) Quarterly Mobile Phone Tracker, the top smartphone vendors Huawei, OPPO and vivo cornered 47% of the China smartphone market in the second quarter of 2016. In 2015 and 2016Q1, the top three smartphone vendors for that period had a market share of 43% and 45% respectively. This shows that the market continues to consolidate further as the share of the top three vendors continue to increase.

"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 2016Q2 include:

Strength in offline channels. OPPO and vivo continued to excel largely due to the strength of their offline channels, with their shops and advertisements occupying most of the Tier 3 to Tier 5 cities. This is still a more convenient option for consumers living in these cities, as they can easily head to one of the physical shops for after-sale services. In the Tier 1 and 2 cities, they continued their focus on sponsorships of key entertainment shows to win consumers over. JD's 618 sale event last June also saw OPPO and vivo posted growth in terms of the number of phones sold through eTailers.

Focused marketing messages on a key technology. The marketing messages of the top two vendors for 2016Q2, namely OPPO and Huawei, also focused on one or two key attributes. OPPO promoted its fast-charge technology along with its famous tag line '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. On the other hand, Huawei focused on promoting P9, making it one of the key products for the quarter. Huawei specifically targeted consumers in search of a good camera in its marketing messages, putting emphasis on its Leica lens and its flatness. The tactic worked and spread like wildfire through WeChat, and helped it to gain consumer interest.

Celebrity endorsements. With growth coming mainly from replacement users in PRC, vendors employed aggressive marketing in the past few months. 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 while Xiaomi hired three different ambassadors for its Redmi line. Recently, Huawei also announced a brand ambassador for its Honor line in China - a departure from its previous marketing message focused on product features. Most of these ambassadors seem to target 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 seen to be a new tactic for vendors such as Xiaomi that never used to spend on advertising.

While the Chinese vendors all saw QoQ growth in the market, Apple continued to decline in its shipment volumes. The iPhone SE was not a hit in China, where consumers prefer larger screen-sized phones. In 2016Q2, close to 90% of phones shipped in China had screen sizes that were 5 inches and above. Apple fans are holding out for the new iPhones to be launched in 2016Q3, which could likely give Apple a boost in China.

"In the past, Xiaomi started the trend of selling its phones online and other vendors soon followed suit and created their own online brand. After vendors witnessed OPPO's success with its R9, they also started riding on the trend of hiring celebrity endorsers to represent their brand and appeal more to the young crowd," adds Tay.

Despite the market being saturated and driven mainly by replacement users, vendors are still 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.

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Tags: huawei  oppo  vivo  China