Sales of China’s domestic smartphone market continues to grow, but the spoils of the increase are not going to international brands like Apple and Samsung. Instead, domestic smartphone makers are gobbling up 87% of the smartphone shipment in Q2 2017, according to a new report from research firm Counterpoint. The top four Chinese brands—Huawei, Oppo, Vivo, and Xiaomi—have eaten away close to 69% of the market.

One notable change is Xiaomi’s comeback. After declining for a few quarters, Xiaomi, once called the Apple of China, is showing a positive uptick at 20% YoY growth. 2016 was the first time the privately-held company did not disclose its annual sales. Based on data published by research firm IDC, Xiaomi slipped to the fifth spot in the home market as demand for its smartphones declined 40.5% YoY in Q4 2016. In Q2 2017, Xiaomi overtook Apple’s fourth place.
“The key reason behind the [Xiaomi] comeback can be attributed to strong demand for its latest flagship Mi 6 and low-tier models such as Redmi Note 4X as well as focus on diversifying distribution channels,” says Tarun Pathak, Associate Director of Counterpoint. Xiaomi had traditionally relied only on online channels for smartphone sales, whereas its rivals Vivo and Oppo have found increasing success in investing heavily in offline stores and expanding their reach to tier-2 and tier-3 cities. Xiaomi has responded by opening more Mi Home stores to drive offline growth.

Apple’s smartphone sales are also under attack on a global scale. According to research company Gartner, the top three Chinese brands Huawei, Oppo and Vivo have a combined global market share of 24% in the first quarter of 2017, up 7% YoY. Samsung comes in at 20.7% followed by Apple at 13.7%. Top Chinese brands are edging in closer to their international counterparts with competitively priced, high-quality smartphones, aggressive marketing and sales promotion, reckons Anshul Gupta, research director at Gartner.

Despite Chinese smartphones’ widening margins both at home and globally, analysts from IDC believe that Apple’s weak performance is seasonal, as most Apple users are expected to be holding out for the new iPhone 8 launching in 2017 at iPhone’s 10th anniversary.

Telling the uncommon China stories through tech. I can be reached at ritacyliao [at] gmail [dot] com.

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