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Mobile sector senses big growth opportunities in China

Time: 2021-03-01 20:49:11

Author: By MA SI

From: http://www.chinadaily.com.cn/

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Sun Juanjuan, a white-collar worker in Shanghai, had been using an iPhone X for more than three years before buying an iPhone 12 immediately after Apple Inc unveiled its first smartphones with 5G connectivity in October.

"I have been waiting for Apple's 5G smartphone for a long time. When the iPhone 12 was unveiled, I decided to buy one immediately. I love the green color so much," Sun said.

Consumers like Sun are pushing sales of Apple to new highs in China. The United States tech giant raked in its highest ever revenue in China in the fourth quarter, driven by the popularity of its iPhone 12 series.

Apple said its China revenue came in at $21.31 billion in the three months ended Dec 26, up 57 percent from a year earlier.

Apple CEO Tim Cook attributed the strong performance to "more than an iPhone story", adding that its other products also contributed a lot, but he also highlighted that the iPhone 12 was crucial in fueling phone upgrades.

"China had a record number of upgraders during the quarter, the most we've ever seen in a quarter. I think probably some portion of this was that people probably delayed purchasing in the previous quarter as rumors started appearing about an iPhone," Cook said.

At the same time, a well-established 5G network in China and local consumers' mounting enthusiasm about 5G handsets also contributed to iPhone 12 sales, he added.

Amber Liu, research analyst at Canalys, said: "Apple had a great year in China where full year shipments finally returned to the 2018 level, driven by both iPhone 11 and iPhone 12 models. Apple recorded its highest quarterly shipments in China since the fourth quarter of 2015 when the iPhone 6S was launched. Aggressive online promotions across e-commerce players, coupled with widely available trade-in plans and interest-free installments with major banks, drove Apple's stellar performance."

It is also worth noting that Apple's launch of the iPhone 12 series in China coincides with the struggles of Huawei Technologies Co, a rival in the high-end segment, which was facing severe shortages of key components for smartphones due to the US government's restrictions on its supply chain.

In the fourth quarter, Apple was the second largest smartphone vendor in China. It reported its best performance in the nation in recent years, shipping more than 15.3 million units in the October-December period, with an 18 percent market share, up from 15 percent from a year earlier, said Canalys.

Though Huawei maintained its top spot in China, its local smartphone shipments declined by 44 percent year-on-year in the quarter, with its local market share shrinking to 22 percent.

Nicole Peng, vice-president of mobility at Canalys, said: "It is possibly Huawei's toughest time as it is restrained in even serving its home market. Huawei's sell-in shipments shrunk by nearly half sequentially, despite huge demand for Huawei devices, as the vendor is unable to fulfill this demand in the foreseeable future."

Will Wong, research manager for client devices at International Data Corp Asia-Pacific, said in a research note that Huawei faced supply shortages in three series due to the continued impact from the trade bans-with its Mate 40 series in the fourth quarter shipping fewer than the Mate 30 series by more than 60 percent compared to the fourth quarter of 2019.

Other vendors are eyeing this opportunity. IDC said that from October to December, almost all of the top five vendors recorded favorable growth-with the exception of Huawei.

Oppo, Vivo and Xiaomi, which were ranked third to fifth in the Chinese smartphone market, are fighting to win over Huawei's market share. Oppo's growth in the fourth quarter was mainly supported by its A32 and Reno5 series. The A32 model recorded nearly 4 million shipments, while the Reno5 series was able to penetrate the offline channel's $350-$450 segment with its more reasonable pricing and eye-catching design. This helped Oppo reach top spot in December, IDC said.

These vendors are also scrambling to win over Huawei's offline channel partners across the country, including small rural peers, backed by huge investments in store expansion and marketing support.

"These commitments brought immediate results, and market share improved within mere months. This year will clearly be a year of aggressive expansion for Oppo, Vivo and Xiaomi," Peng from Canalys said.

As 5G becomes a common feature for new smartphones, these vendors will double down investments in their flagship and premium portfolios focusing on product breadth and premium components, Peng added.

But she also said Honor, which was sold by Huawei in November, is a player that shouldn't be ignored in China this year, as the vendor has inherited most of Huawei's strengths and aims to win over Huawei's loyal customers.

Zhao Ming, CEO of Honor, said the company will expand its presence in the high-end smartphone market this year after it inked partnerships with major chip suppliers such as Intel, Micron and Qualcomm to reconstruct supply chains.

Zhao said Honor now has about 8,000 employees, with over 50 percent of them being research and development staff.

"With five R&D centers and over 100 innovation labs worldwide, Honor is committed to developing powerful technology that empowers people to become a better version of themselves," he said.

Mobile sector senses big growth opportunities in China
The United States tech giant raked in its highest ever revenue in China in the fourth quarter, driven by the popularity of its iPhone 12 series.
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