Apple has slipped from the ranks of the top five smartphone vendors in China for the first time since it surged in popularity there. According to Canalys, a market research firm, iPhone shipments in China saw a 6.7% year-on-year decline in the second quarter of 2024.
Rise of Domestic Brands
Analysts credit this decline to the resurgence of domestic brands. Leveraging advanced, locally manufactured components, Chinese companies such as Huawei, Vivo, Oppo, Honor, and Xiaomi have experienced substantial growth. Notably, Huawei has made a robust return to the high-end market, challenging Apple's premium market position.
Market Growth and Competition
The Chinese smartphone market grew by 10% year-on-year, with over 70 million units shipped in Q2. Vivo led the market with a 19% share, equivalent to 13.1 million units shipped. Oppo, Honor, and Huawei followed, each shipping around 10 million units. Xiaomi, which had been facing difficulties, saw a 17% year-on-year increase, re-entering the top five with 10 million units shipped.
Conversely, Apple's shipments fell to 9.7 million units, resulting in a reduced market share of 14%. Despite offering discounts of up to 23%, the company struggled to maintain its position. Domestic competitors capitalized on localized supply chains and strong brand loyalty among Chinese consumers.
Strategic Moves
In light of this decline, Apple’s Chief Operating Officer Jeff Williams recently visited China to meet with officials and reiterate the company’s commitment to the market. Analysts, including Lucas Zhong of Canalys, suggest that Apple needs to localize its “Apple Intelligence” platform for China within the next year to recapture market share. The forthcoming iPhone 16 lineup also offers an opportunity to stimulate demand and improve Apple's market position.
Nevertheless, the competition remains intense. Domestic brands offer appealing features at competitive prices, and it remains uncertain whether Apple can adapt and regain its former dominance in China.
