Apple is losing market share in China: IDC

Although the smartphone market in China witnessed a 19 percent growth on a year-on-year basis in 2016, Apple lost a significant market share to Chinese brands Huawei, Oppo and Vivo.

The Cupertino giant, Apple shipped 44.9 million iPhones to China, which is a decline of 23.2 percent the past year, according to the data from a latest IDC report. Apple came in fourth place in Q4 with a market share of 11 percent, down from 15 percent a year earlier. In Q4, Apple's smartphone shipments in China sank 12.8 percent year over year.

The top three smartphone vendors in China are Chinese companies: Oppo with 18.1 percent, Huawei with 16.9 percent and Vivo with 16 percent of market share in Q4. These companies also posted sharp unit-shipment growth last quarter, with Oppo up 109.2 percent year over year, Huawei up 27.7 percent and Vivo up 96.4 percent, IDC said.

The report thrones Oppo as the market leader in China with more than 78.4 million smartphones, up 122 percent on a year-on-year basis. On the other hand, Oppo's rival, Vivo also grew about 97 percent past year. Huawei grew about 22 percent increase in yearly sales last year.

"Increased dependence on mobile apps has led to consumers to seek phone upgrades, thus helping drive the large growth in 2016 Q4," said Tay Xiaohan, senior market analyst with IDC Asia/Pacific's Client Devices team. "In lower-tiered cities, there was a similar demand by consumers, which OPPO and Vivo met by aggressively pushing mid-range smartphones in these cities."

Despite the efforts to make a ground on the Chinese market with iPhones, last year saw only 9.6 percent market share of all smartphones shipments in China, down from 13.6 percent the year prior.

Apple released its earnings results last week from the first fiscal quarter which ended on December 31. The company posted record quarterly revenue of $78.4 billion. Also, the data showed Apple generated $16.2 billion in the Greater China segment in the quarter, compared to $18.37 billion in the first quarter of 2016, which was a drop of 12 percent.

"Greater China net sales decreased during the first quarter of 2017 compared to the same quarter in 2016 due primarily to lower net sales of iPhone and the effect of weakness in foreign currencies relative to the U.S. dollar," the company said in its quarterly report.

In 2016, Apple opened a research centre in Shenzen and also revealed China-focused features for its iOS 10 software. In May, Apple invested $1 billion in Didi Chuxing with an attempt to please the Chinese government.

Still churning sterile results, Apple's declining market share in China is likely because iPhone users are holding onto their handsets longer and postponing upgrades, according to IDC.

As Apple, Xiaomi is also in the same boat. Xiaomi, which was China's hottest phone brand in 2014 and '15, shipped 41.5 million smartphones last year. With sales of 64 million Mi phones, Xiaomi witnessed a drop of 36 percent, bringing it to the fifth place. Recently, Xiaomi lost its international Vice President Hugo Barra to Facebook, who is currently leading its VR expansion.

Nevertheless, IDC analysts are confident about the company’s growth in 2017. The report added, "Most Apple users are expected to be holding out for the new iPhone that will be launched this year, and that will help the brand to see a growth in 2017. Apple’s 10-year anniversary iPhone will also likely attract some of the high-end Android users in China to convert to an iPhone."

Apple is yet to comment on this report.