Mobile Phones in China

Euromonitor International
August 2019
MOBILE PHONES IN CHINA Passport i

LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Maturity and Longer Replacement Cycles Lead To Volume Decline in Smartphones .............. 1
Growing Role of Digital Payment Supports Importance of Smartphones .................................. 1
Market Seeing the Emergence of Gaming Phones ................................................................... 2
Competitive Landscape ................................................................................................................ 2
Huawei Pulls Further Ahead Through Investment in Innovation ............................................... 2
Meitu Teaming Up With Xiaomi To Stimulate Turnaround ........................................................ 2
Leading Players Adopt Segmented Brand Strategies ............................................................... 2
Category Data .............................................................................................................................. 2
Table 1 Sales of Mobile Phones by Category: Volume 2014-2019 ........................... 2
Table 2 Sales of Mobile Phones by Category: Value 2014-2019 .............................. 3
Table 3 Sales of Mobile Phones by Category: % Volume Growth 2014-2019 .......... 3
Table 4 Sales of Mobile Phones by Category: % Value Growth 2014-2019 ............. 3
Table 5 Sales of Smartphones by Screen Size: % Retail Volume 2018-2019 .......... 3
Table 6 NBO Company Shares of Mobile Phones: % Volume 2015-2019 ................ 4
Table 7 LBN Brand Shares of Mobile Phones: % Volume 2016-2019 ...................... 5
Table 8 Distribution of Mobile Phones by Channel: % Volume 2014-2019 ............... 6
Table 9 Forecast Sales of Mobile Phones by Category: Volume 2019-2024 ............ 6
Table 10 Forecast Sales of Mobile Phones by Category: Value 2019-2024 ............... 6
Table 11 Forecast Sales of Mobile Phones by Category: % Volume Growth
2019-2024 .................................................................................................... 7
Table 12 Forecast Sales of Mobile Phones by Category: % Value Growth 2019-
2024 ............................................................................................................. 7
Table 13 Forecast Sales of Smartphones by Screen Size: % Retail Volume
2019-2024 .................................................................................................... 7

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MOBILE PHONES IN CHINA Passport 1

MOBILE PHONES IN CHINA

HEADLINES
▪ Feature phones sees volumes fall by 22% to 4.4 million units in 2019
▪ Lack of innovation hampers development of feature phones
▪ Smartphones sees volumes fall by 6% to 366.5 million units in 2019
▪ Maturity and longer replacement cycles contribute to decline in smartphones
▪ Mobile phones volumes are expected to fall with a 5% CAGR over the forecast period,
reaching 291.3 million units in 2024

PROSPECTS

Maturity and Longer Replacement Cycles Lead To Volume Decline in

Smartphones
The smartphones category was close to saturation at the end of the review period, with
improving product quality further limiting growth potential by leading to longer replacement
cycles. A lack of strong positive sales drivers to encourage consumers to replace existing
smartphones with new ones was also a factor as smartphones experienced ongoing volume
decline in 2019. However, the improved quality of products and related upmarket shift in
demand also led to a marked rise in unit price, resulting in significant current value growth in the
final year of the review period.
The roll-out of the 5G network, scheduled to take in 40 cities nationwide by October 2019, is
likely to have a positive impact on sales during the forecast period, as consumers replace
existing smartphones with products capable of utilising 5G more effectively. While
manufacturers, including Huawei, Xiaomi and OPPO, have launched 5G smartphones,
consumer versions were not yet ready at the time of writing. New phones include technological
improvements largely focused around camera capabilities and larger screen-to-body ratios.
Despite the roll-out of the new network and its boost to demand for new smartphones, the
category is expected to see volumes decline continue over 2019-2024. 5G should, however,
present growing opportunities for value-adding innovation that enables manufacturers to
generate value growth during the forecast period.

Growing Role of Digital Payment Supports Importance of Smartphones

The increasingly important role of digital payment is supporting the deep penetration of
smartphones in China. E-commerce is booming in the country. Moreover, supported by well-
developed mobile internet, smartphones play the most important role in covering various
payment occasions including retailing, transportation and bill payment. Furthermore, the
development of larger screen smartphones, 5.5 inches and larger, which facilitate on-the-go
online shopping has provided a significant boost to remote purchases amongst local consumers.
Moreover, the ongoing development and diversification of apps, for shopping, payment and
lifestyle consumption, have further enhanced convenience, leading to dynamic growth of remote
purchases and mobile payment.

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Market Seeing the Emergence of Gaming Phones

The end of the review period saw the emergence of game phones aimed at providing a more
satisfying gaming experience to China’s rapidly expanding base of gamers. Mobile gaming has
become an increasingly widespread pastime for consumers looking to divert themselves while
engaged in activities such as travelling. A number of models/brands have been introduced
targeting demand for products that enhance the gaming experience, including Magic by Nubia,
Black Shark with investment from Xiaomi, OPPO Reno, Vivo’s iQOO and ASUS’s ROG.
Tencent, a giant in the Chinese gaming industry, is also approaching relevant parties with the
aim of developing a model.

COMPETITIVE LANDSCAPE

Huawei Pulls Further Ahead Through Investment in Innovation

With considerable investment in technological improvements and product innovation, Huawei
Technologies Co Ltd further strengthened its leading position in mobile phones in China in 2019.
In 2018, it launched its new all-screen P20 and P20 Pro smartphones, among which P20 Pro is
equipped with three 40MP Leica cameras and a Kirin 970 AI chip. These innovations help to
improve the photographic function and make photographs look more professional. Furthermore,
its Honor series has launched new smartphones with an AI chip to provide facial recognition, AI
photography mode, AI smart screen-unlock and AI smart travelling functions.

Meitu Teaming Up With Xiaomi To Stimulate Turnaround

Having seen dynamic growth in 2016 and 2017 by appealing to young female consumers with
products applying AI and 3D reconstruction technologies to photographic and beauty functions,
Meitu saw its sales plummet in the final two years of the review period. In November 2018,
Meitu announced that Xiaomi had obtained the right to manufacture and market Meitu branded
smartphones globally. Under the deal, new smartphones will carry the Meitu brand, but Xiaomi
will be responsible for design, research and development, and sales. Meitu will, though, still be
involved in the development of camera software. Xiaomi will pay a percentage of phone profits
to Meitu for five years or until a certain number of units have been sold, and then move to a flat
per-phone licensing fee. As well as boosting the capacity of the Meitu brand in terms of
innovation, the deal should significantly strengthen its reach, as it will be able to take advantage
of Xiaomi’s strong distribution network.

Leading Players Adopt Segmented Brand Strategies

The leading mobile phone manufacturers in the Chinese market are increasingly working to
offer differentiated products via segmented branding strategies. Xiaomi has split Redmi into a
separate brand, for example, while Vivo has launched the sub-brand, iQOO. In addition, OPPO
has announced plans to bring its Realme sub-brand, which was previously only available
overseas, to the Chinese market late in 2019.

CATEGORY DATA
Table 1 Sales of Mobile Phones by Category: Volume 2014-2019

'000 units
2014 2015 2016 2017 2018 2019

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Feature Phones 27,179.8 13,589.9 8,833.4 7,066.7 5,699.1 4,433.6

Smartphones 408,246.0 426,617.1 458,613.4 435,682.7 389,936.0 366,539.8
Mobile Phones 435,425.8 440,207.0 467,446.8 442,749.4 395,635.1 370,973.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 2 Sales of Mobile Phones by Category: Value 2014-2019

CNY bn
2014 2015 2016 2017 2018 2019

Feature Phones 7.6 3.4 2.0 1.5 1.1 0.8

Smartphones 608.3 667.3 767.6 787.6 796.5 853.5
Mobile Phones 616.0 670.7 769.6 789.0 797.6 854.3
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 3 Sales of Mobile Phones by Category: % Volume Growth 2014-2019

% volume growth
2018/19 2014-19 CAGR 2014/19 Total

Feature Phones -22.2 -30.4 -83.7

Smartphones -6.0 -2.1 -10.2
Mobile Phones -6.2 -3.2 -14.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 4 Sales of Mobile Phones by Category: % Value Growth 2014-2019

% current value growth

2018/19 2014-19 CAGR 2014/19 Total

Feature Phones -26.6 -36.0 -89.3

Smartphones 7.2 7.0 40.3
Mobile Phones 7.1 6.8 38.7
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 5 Sales of Smartphones by Screen Size: % Retail Volume 2018-2019

% retail volume
2018 2019

<4.7 inch 20.0 14.0

4.7 inch - 5.49 inch 40.0 36.0
>= 5.5 inch 40.0 50.0
Total 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

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MOBILE PHONES IN CHINA Passport 4

Table 6 NBO Company Shares of Mobile Phones: % Volume 2015-2019

% retail volume
Company 2015 2016 2017 2018 2019

Huawei Technologies Co 14.7 16.5 20.8 26.8 29.8

Ltd
Guangdong OPPO Mobile 8.0 16.0 18.6 20.2 21.3
Telecommunications Corp
Ltd
Vivo Communication 8.4 13.9 15.8 18.6 20.2
Technology Co Ltd
Xiaomi Technology Co Ltd 14.7 9.0 11.4 12.1 12.1
Apple Computer Trading 11.3 9.5 9.3 9.3 8.8
(Shanghai) Co Ltd
Zhuhai Meizu Electronic 4.3 4.3 4.1 2.3 1.2
Technology Co Ltd
Samsung China 8.8 6.7 5.0 2.4 1.2
Electronics Co Ltd
Lenovo (China) Ltd 3.5 0.9 0.6 0.9 0.8
ZTE Corp 4.0 3.3 1.0 0.5 0.3
Nubia Technology Co Ltd - - 0.3 0.3 0.2
HMD Technology - - 0.2 0.2 0.2
(Shenzhen) Co Ltd
Sony (China) Ltd 0.5 0.3 0.3 0.1 0.1
Meitu Inc 0.1 0.2 0.4 0.2 0.1
Lenovo Group Ltd 0.1 0.1 0.2 0.1 0.1
HTC Communication Co Ltd 0.8 0.5 0.3 0.2 0.0
Shenzhen Gionee 4.8 5.6 3.4 1.3 0.0
Communication Equipment
Co Ltd
Yulong Computer 6.6 3.2 1.4 0.2 0.0
Communication
Technology (Shenzhen)
Co Ltd
AsusTek Computer 0.2 0.1 0.1 0.0 0.0
(China) Inc
Beijing Tianyu 2.1 0.0 0.0 0.0 0.0
Communication Equipment
Co Ltd
TCL Corp 0.7 0.3 0.3 0.1 0.0
Philips China Co Ltd 0.0 0.0 0.0 0.0 0.0
Leshi Internet 0.9 3.9 1.8 - -
Information &
Technology Corp, Beijing
LG Electronics (China) 0.7 0.5 0.3 - -
Co Ltd
Beijing Nokia Mobile 0.3 0.2 - - -
Telecommunications Co Ltd
Amio Electronic Co Ltd 0.0 - - - -
Konka Group Co Ltd 0.0 - - - -
Ningbo Bird Co Ltd 0.0 - - - -
Motorola (China) - - - - -
Electronic Co Ltd
Ericsson (China) Ltd - - - - -
Research In Motion - - - - -
China Ltd
Others 4.5 5.1 4.6 4.3 3.5
Total 100.0 100.0 100.0 100.0 100.0

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Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 7 LBN Brand Shares of Mobile Phones: % Volume 2016-2019

% retail volume
Brand (GBO) Company (NBO) 2016 2017 2018 2019

Huawei Huawei Technologies Co Ltd 16.5 20.8 26.8 29.8

Oppo Guangdong OPPO Mobile 16.0 18.6 20.2 21.3
Telecommunications Corp
Ltd
Vivo Vivo Communication 13.9 15.8 18.6 20.2
Technology Co Ltd
Xiaomi (Xiaomi Corp) Xiaomi Technology Co Ltd 9.0 11.4 12.1 12.1
iPhone (Apple Inc) Apple Computer Trading 9.5 9.3 9.3 8.8
(Shanghai) Co Ltd
Meizu (Meizu Zhuhai Meizu Electronic 4.3 4.1 2.3 1.2
Telecom Equipment Technology Co Ltd
Co Ltd)
Samsung (Samsung Samsung China 6.7 5.0 2.4 1.2
Corp) Electronics Co Ltd
Lenovo (Lenovo Lenovo (China) Ltd 0.9 0.6 0.9 0.8
Group Ltd)
ZTE ZTE Corp 3.3 1.0 0.5 0.3
Nubia Nubia Technology Co Ltd - 0.3 0.3 0.2
Nokia (Nokia Corp) HMD Technology - 0.2 0.2 0.2
(Shenzhen) Co Ltd
Sony (Sony Corp) Sony (China) Ltd 0.3 0.3 0.1 0.1
Meitu Meitu Inc 0.2 0.4 0.2 0.1
Motorola Lenovo Group Ltd 0.1 0.2 0.1 0.1
HTC (HTC Corp) HTC Communication Co Ltd 0.5 0.3 0.2 0.0
Gionee (Gionee Shenzhen Gionee 5.6 3.4 1.3 0.0
Communication Communication Equipment
Equipment Co Ltd) Co Ltd
Coolpad Yulong Computer 3.2 1.4 0.2 0.0
Communication
Technology (Shenzhen)
Co Ltd
Asus (AsusTek AsusTek Computer 0.1 0.1 0.0 0.0
Computer Inc) (China) Inc
K-Touch Beijing Tianyu 0.0 0.0 0.0 0.0
Communication Equipment
Co Ltd
TCL TCL Corp 0.3 0.3 0.1 0.0
Letv Leshi Internet 3.9 1.8 - -
Information &
Technology Corp, Beijing
LG (LG Corp) LG Electronics (China) 0.5 0.3 - -
Co Ltd
Nokia (Nokia Corp) Beijing Nokia Mobile 0.2 - - -
Telecommunications Co Ltd
Amio Amio Electronic Co Ltd - - - -
Konka Konka Group Co Ltd - - - -
Motorola (Google Inc) Motorola (China) - - - -
Electronic Co Ltd
Motorola (Motorola Motorola (China) - - - -
Inc) Electronic Co Ltd
Motorola (Motorola Motorola (China) - - - -

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Mobility Inc) Electronic Co Ltd

Bird Ningbo Bird Co Ltd - - - -
Blackberry Research In Motion - - - -
(Research in Motion China Ltd
Ltd)
Others Others 5.1 4.6 4.3 3.5
Total Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 8 Distribution of Mobile Phones by Channel: % Volume 2014-2019

% retail volume
2014 2015 2016 2017 2018 2019

Store-Based Retailing 69.4 64.0 60.1 58.2 57.6 57.4

- Grocery Retailers 2.5 2.3 2.1 1.9 1.7 1.6
-- Discounters - - - - - -
-- Hypermarkets 2.5 2.3 2.1 1.9 1.7 1.6
-- Supermarkets - - - - - -
-- Other Grocery - - - - - -
Retailers
- Non-Grocery Specialists 59.5 54.6 51.2 49.8 49.6 49.9
-- Electronics and 59.5 54.6 51.2 49.8 49.6 49.9
Appliance Specialist
Retailers
-- Other Non-Grocery - - - - - -
Specialists
- Mixed Retailers 7.4 7.1 6.8 6.5 6.3 5.9
Non-Store Retailing 30.6 36.0 39.9 41.8 42.4 42.6
- Direct Selling - - - - - -
- Homeshopping 1.1 1.0 0.9 0.8 0.7 0.6
- Internet Retailing 29.5 35.0 39.0 41.0 41.7 42.1
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 9 Forecast Sales of Mobile Phones by Category: Volume 2019-2024

'000 units
2019 2020 2021 2022 2023 2024

Feature Phones 4,433.6 3,456.4 2,685.0 2,077.1 1,599.5 1,227.9

Smartphones 366,539.8 340,999.8 330,480.8 318,870.3 305,290.4 290,113.1
Mobile Phones 370,973.4 344,456.2 333,165.8 320,947.4 306,890.0 291,341.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 10 Forecast Sales of Mobile Phones by Category: Value 2019-2024

CNY bn
2019 2020 2021 2022 2023 2024

Feature Phones 0.8 0.6 0.4 0.3 0.2 0.2

Smartphones 853.5 897.3 956.6 996.8 1,021.1 1,028.6

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Mobile Phones 854.3 897.9 957.0 997.1 1,021.4 1,028.8

Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 11 Forecast Sales of Mobile Phones by Category: % Volume Growth 2019-2024

% volume growth
2019/20 2019-24 CAGR 2019/24 Total

Feature Phones -22.0 -22.6 -72.3

Smartphones -7.0 -4.6 -20.9
Mobile Phones -7.1 -4.7 -21.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 12 Forecast Sales of Mobile Phones by Category: % Value Growth 2019-2024

% constant value growth

2019/2020 2019-24 CAGR 2019/24 Total

Feature Phones -27.3 -26.3 -78.2

Smartphones 5.1 3.8 20.5
Mobile Phones 5.1 3.8 20.4
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 13 Forecast Sales of Smartphones by Screen Size: % Retail Volume 2019-2024

% retail volume
2019 2020 2021 2022 2023 2024

<4.7 inch 14.0 12.0 10.0 9.0 8.0 7.0

4.7 inch - 5.49 inch 36.0 30.0 28.0 27.0 26.0 25.0
>= 5.5 inch 50.0 58.0 62.0 64.0 66.0 68.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

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