Smartphone sales in China declined 17% YoY in Q2 2020, according to Counterpoint’s Market Pulse – Monthly Smartphone Sales Tracking service. However, the sales increased 9% QoQ indicating some signs of recovery. COVID-19 has been mostly contained in China but the demand for smartphones is yet to recover to pre-COVID levels.
Commenting on the overall Chinese smartphone market growth, Mengmeng Zhang, Research Analyst at Counterpoint Research, said, “Although China’s commercial activities have resumed since the pandemic has subsided, consumer confidence remains low. Both OEMs and Chinese operators are actively pushing 5G smartphones through lowering prices of 5G devices as well as 5G plans. This has increased the adoption of 5G, with one-third of the total smartphone sales during the quarter were 5G devices, the highest adoption in the world. However, this was still not able to offset the overall market decline.”
Exhibit 1: Smartphone Sales Volumes Share (%) of Key OEMs in China
Source: Monthly Smartphone Market Pulse, July 2020
Highlighting the fiercely competitive landscape, Flora Tang, Research Analyst at Counterpoint, said, “Huawei continues to be the best performer in the China market, grabbing 46% market share in the quarter. Huawei achieved 14% YoY growth despite the overall market slowdown. China has become the most important market for Huawei as its overseas shipments saw a sharp decline after it lost the ability to use GMS in its latest smartphones. Huawei’s hefty investment in expanding distribution networks both online and offline has paid off. Also, Huawei’s 5G portfolio grew quickly with the help of the high-end Mate 30 and P40 series, as well as mid-tier Nova 7 series.
In terms of growth, Apple was the fastest-growing key OEM during the quarter. Despite the market decline, Apple grew an impressive 32% YoY due to the continued popularity of the iPhone 11 series and price cuts. iPhone SE 2020 also quickly entered among the top 3 best-selling iPhones in Q2 2020.June was the best month in terms of smartphone sales so far this year after COVID-19 outbreak driven by surge in sales by Xiaomi (+42% MoM), Huawei (+11%) ”
Exhibit 2: Q2 2020: Smartphone ÓEMs Sales annual Volume Growth Trends
Source: Monthly Smartphone Market Pulse, July 2020
Discussing the development of 5G smartphones in China, Ethan Qi, Senior Analyst at Counterpoint, highlighted, “Despite a slowdown in the smartphone market in China, Chinese OEMs have picked up the pace in 5G developments that were hampered by COVID-19 disruptions in Q1 2020. In Q2, 33% of smartphones sold were 5G enabled compared to just 16% in Q1. The proportion was even higher in June, where more than 40% of smartphones sold were 5G capable. China’s 5G smartphone market is quite consolidated with HOVX grabbing 96% of the market. Huawei leads in 5G smartphone sales accounting for 60% of the market, followed by Vivo, OPPO, and Xiaomi. 5G smartphones in China are still priced in the mid-to-high price range of USD$400 and above, however, 5G smartphone prices are quickly moving towards lower-tier price bands. High-end 5G smartphones are predominantly from Huawei, while Huawei, OPPO, Xiaomi, and Vivo all have various offerings in the mid-tier.”