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Sales of Apple’s iPhone declined in China despite overall worldwide growth

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Apple's next iPhone will have to 'wow' Chinese consumers if it wants to turn things around in the country.

Apple may have just come off a record quarter — the Cupertino, California-based company managed to sell a record 78 million iPhones in the first fiscal quarter of 2017 — but it’s struggling to maintain its market position in China. According to market researchers at IDC, annual Apple iPhone shipments fell for the first time in the country, dropping 23 percent in 2016 compared to the same period a year ago.

Strong local competition is to blame. Chinese smartphone makers Oppo, Huawei, and Vivo nabbed the top three slots in the country, and Vivo accounted for 48 percent of shipments in the country during 2016.

Conversely, Apple iPhone sales dipped 23.2 percent, shrinking Apple’s overall market share in the country to 9.6 percent — the lowest in two years. And analysts at Gartner report that the iPhone saw a year-on-year dip in market share from 13 percent to 11.5 percent in the third quarter, its lowest since 2009.

More: Chinese smartphone makers, not Apple, benefited from Samsung’s Note 7 disaster

“Even though the new black-colored iPhones caught the attention of consumers, overall, the new launches did not create as much of a frenzy compared to the past,” IDC said in its report.

It’s not for lack of a market. Oppo alone boosted annual number shipments from more than 35 million units in 2015 to 78.4 million last year, IDC said, and Vivo doubled sales. In the third quarter, sales from China made up 81 percent of Oppo’s profits. And Chinese smartphone makers dominated China’s list of vendors — Huawei ended the quarter with 9.3 percent market share, Oppo with 7 percent, and Vivo with 5.8 percent.

More: The iPhone 7 is about to hit a serious decline in demand, according to analyst

IDC credits “vast store networks,” “improve customer service,” and a “push to open their own retail stores” as key contributors to local brands’ growth. “We expect [Chinese] vendors to increase their shipments in the international market, with India as a key target for these top Chinese vendors,” IDC said.

It’s not all doom and gloom for Apple, though. According to IDC, the upcoming iPhone 7S/8 should mark an uptick in sales as Chinese consumers flock to what’s expected to be one of the biggest product launches in the company’s history.

“Apple’s 10-year anniversary iPhone will also likely attract some of the high-end Android users in China to convert to an iPhone, IDC said.

More: The iPhone 7 is about to hit a serious decline in demand, according to analyst

Apple’s not the only smartphone vendor that struggled to make inroads this year. Samsung’s Galaxy Note 7 debacle saw the Seoul, South Korea-based company’s market share fall from 23.6 percent to 19.2 percent, the biggest slide in the company’s history.