Chinese smartphone market, world's largest, shrinks in first-quarter: study

By Reuters

May 11, 2015 07:33 AM EDT

China's smartphone market has reached saturation, according to a new study by industry analyst IDC that carries potentially significant implications for the global handset industry led by giants like Apple Inc (AAPL.O) and Samsung Electronics Co Ltd (005930.KS).

During the first quarter of 2015, smartphone shipments in the world's most populous country shrank for the first time in six years to 98.8 million, down 4.3 percent from a year earlier, IDC said in report on a Monday, attributing the slump to "market saturation".

The rise of Chinese consumers has fueled booming demand for smartphones in recent years, lifting firms including Apple - which made a record $16.8 billion in revenue in China last quarter thanks to its iPhone 6 series launch - and Beijing-based Xiaomi [XTC.UL], which grew into a $46 billion company in just four years.

China overtook the United States in 2011 to become the world's largest smartphone market.

But IDC's data suggesting that a slowdown has already begun could pose questions for the industry.

Thanks to its large-screen iPhone 6, Apple consolidated its position in the shrinking Chinese market, claiming 14.7 percent market share, ahead of Xiaomi and Huawei at 13.7 percent and 11.4 percent, respectively, according to IDC.

Global leader Samsung came in fourth in China with a 9.7 percent share.

The slowdown in China will increase pressure on manufacturers to seek growth in India and Southeast Asia, where striking partnerships with distributors will prove critical, said IDC analyst Xiaohan Tay.

Xiaomi, for one, has actively courted both online and offline sellers in India over the past year. The company, which has sold its handsets on for the past year, said last month it would also sell its phones at The Mobile Store retail chain throughout the country.

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