Flourish of Chinese Smartphones, Should Apple Worry

The most recent quarter revealed Chinese smartphone shipments increased to an overwhelming 18.7% to 135.7 million. The increase is attributable to Chinese brands have been aggressively marketing their products.

The OPPO brand which was used to be a brand never heard, and has tripled its market share from last year making it able to oust Huawei from its recent seat – selling 78.4 million units in the Chinese market compared to 76.6 million of Huawei’s. Last 2015, OPPO was able to sell 50 million smartphones making its way to the top 10 smartphone brands known worldwide. The leading vendors known now are OPPO, Huawei and Vivo.

Just last week, Apple announced its earnings results for the first fiscal quarter ending December 31. The records show that Apple earned $78.4 billion, where $16.2 billion is from the Greater China. Yet this record is lower compared to Apple’s $18.37 billion revenue in the first quarter of 2016 from Greater China. It demonstrated a 12% year-on-year drop.

According to the latest report from IDC Quarterly Mobile Phone Tracker, Apple’s market share fell 4 percentage points to 9.6% whereas the Chinese smartphone market increase 9% for the whole year of 2016.

It is indeed remarkable to know that domestic companies like Oppo and Vivo are starting to enhance their features such as having augmented reality and flexible screens to be able to compete with established brands like Apple and Samsung. The consuming public is becoming excited for new releases of their products which in turn translate to a triple-digit number in growth. Vivo and Oppo smartphones are very much accepted in the industry.

Indeed, Apple is fighting a challenging battle versus aggressive domestic competitors. Hence, Apple is set to widen its investments in China. It plans to put up two new research and development centers situated in Suzhou and Shanghai. The other two are located at Beijing and Shenzhen. China is certainly a big market for Apple accounting for $16.23 billion of the company’s quarterly operating segment revenue – nearly close to Apple’s total sales in Europe, Japan and the rest of the Asia-Pacific collectively. It was known that today, both Oppo and Vivo control almost 30% of the market whereas Apple controls only about 10%.

To be sure, Apple needs to strategize a new game plan to drive the profits back to the company.

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