After a decade of breakneck growth, China’s smartphone market is booming as COVID-19 rocks the world’s second largest economy.
According to research firm Counterpoint, the country’s smartphone shipments will drop 14% year-on-year in 2022, reaching its lowest level in a decade. Also, according to Canalys, China’s mobile phone sales fell below 300 million for the first time in his decade. Even in December, when sales historically saw a seasonal spike, smartphone shipments in China fell 5% quarter-on-quarter.
Three years of draconian “zero COVID” policies that have disrupted business and eroded consumer confidence, combined with macroeconomic headwinds, have ended several years of double-digit growth in China. The problem escalated as the sudden easing of COVID-19 restrictions in early December resulted in a spike in cases, putting further pressure on a declining economy. Last year, China’s GDP grew his 3%, the lowest in decades outside 2020.
Alibaba’s annual shopping bonanza in November provided a clue of weakening purchasing power in China. The event, often compared to Black He Friday and seen as a harbinger of consumer appetite in the country, has not disclosed final sales numbers for 2022 for the first time since its inception in 2009.
There was one winner in this gloomy time. According to Canalys, Apple ended his year with an all-time high of 18% market share, thanks to “aggressive promotions” and “resilient” demand in China’s high-end segment. Its rise also coincides with Huawei’s downfall in the luxury mobile phone market as US sanctions cut off access to high-end chipsets.
Apple’s relationship with China remains delicate. The country is not only one of the largest markets, but also a manufacturing backbone that has produced some of the world’s most valuable companies today. But over the past few years, COVID-related turmoil, including rare worker protests at a major Foxconn factory that has slowed production, has caused the hardware giant to rethink its supply chain strategy. The Wall Street Journal reported in early December that Apple was considering moving parts of its supply chain from China to other parts of Asia, including Vietnam and India.
India will play a bigger role in Apple’s supply chain, especially as it plans to expand manufacturing capacity in India to produce 25% of all iPhones by 2025, according to JP Morgan analysts. It is expected to be fulfilled.
The top smartphone brands by shipment in China in Q4 were Apple, Vivo, Oppo, Honor (which was spun off from Huawei following US sanctions against its parent company), and Xiaomi.
