Published on: January 20, 2025 / Update from: January 20, 2025 - Author: Konrad Wolfenstein
China's smartphone market shaken up: Vivo and Huawei dominate, Apple falls behind - Is the folding cell phone the new star? – Image: Xpert.Digital
Changes in the Chinese smartphone market
Shifting the balance of power
The Chinese smartphone market is experiencing a remarkable shift in the balance of power. While competition remains intense, clear winners and losers are emerging. In particular, the position of Apple, a long-time heavyweight, is coming under increasing pressure.
Apple's decline in China
The latest market data shows a significant decline for Apple in China. In 2024, the company fell to third place among the largest smartphone providers. Market research firms like Canalys are reporting Apple's biggest annual sales decline ever in China, with shipments down a staggering 17 percent for the entire year. The development underscores the growing headwinds Apple faces from local competitors in one of its most important global markets.
Market dynamics in 2024
A look at the full-year figures for 2024 illustrates the new dynamic. Budget smartphone maker Vivo secured the top position with a market share of 17 percent, closely followed by Huawei with 16 percent. Apple achieved a market share of 15 percent during the same period. What is particularly striking is that Apple's downward trend lasted through all four quarters of the year and even recorded a slump of 25 percent in the last quarter of 2024.
Reasons for Apple's decline
Lack of advanced AI features
Several factors are contributing to Apple's current difficulties in China. A key point is the lack of advanced AI features in the latest iPhone models offered in China. This could be a decisive disadvantage, especially in a market that is characterized by rapid technological developments and a high affinity for artificial intelligence. Chinese consumers are showing growing interest in smart features that make everyday life easier and provide personalized experiences.
Strong domestic competition
Another important factor is the strong competition from domestic brands such as Huawei and Vivo, which have increasingly relied on innovative technologies in recent years. These companies know how to specifically address the needs and preferences of Chinese consumers and offer attractive alternatives to the iPhone. This also includes the increasing spread of foldable smartphones in the high-price segment. While Apple does not yet have such a model on offer, foldable devices are enjoying growing popularity in China and could represent a decisive selling point for technology-loving buyers. These devices are often perceived as status symbols and offer innovative functionalities that conventional smartphones do not offer.
Huawei's impressive comeback
Huawei's success factors
Huawei's comeback in the premium segment is remarkable. Since launching new smartphones with locally manufactured chipsets in August 2023, the company has seen an impressive resurgence. In the fourth quarter of 2024, Huawei recorded a 24 percent increase in shipments. This success is due not least to Huawei's ability to offer technologically high-quality products that resonate with Chinese consumers, despite international challenges. Developing your own chipsets is often perceived as a sign of national strength and technological independence, which has additional appeal in certain population groups.
Apple's measures and challenges
Unusual discounts
Faced with increasing competitive pressure, Apple has taken unusual measures and resorted to rare price reductions. In early January, there was a four-day promotion in China that offered price reductions of up to 500 yuan (the equivalent of about $68.50) on iPhone 16 models. Such discounts are rather unusual for Apple and indicate the growing pressure to act that the company is facing in China.
Chinese smartphone market recovery
Despite Apple's challenges, the overall Chinese smartphone market is showing signs of recovery. In 2024, the market grew by 4 percent to 285 million units shipped. This suggests that overall demand for smartphones is picking up after the market declined in the previous two years. This upswing could be due to various factors, including a gradual recovery in the economy and the introduction of new, attractive models from various manufacturers.
Technological and economic challenges
Technological gaps
The technological gaps, particularly the lack of advanced AI features in the iPhones for the Chinese market, could be a key factor in Apple's decline. Chinese consumers are increasingly technology-savvy and expect innovative features to enrich their everyday lives. The current lack of a foldable iPhone could also cost Apple market share, as these devices are becoming increasingly popular in the premium segment and are considered pioneers of modern smartphone technology.
Strong domestic competition
The strong domestic competition, especially Huawei's impressive comeback with locally produced chipsets, is putting additional pressure on Apple. Huawei has managed to regain consumer trust and establish itself as a serious competitor in the high-end sector. Other Chinese manufacturers such as Vivo also impress with innovations and designs that are specifically tailored to the preferences of local customers. Vivo's focus on camera technology and aesthetically pleasing designs, for example, has secured them a loyal following.
Changing consumer behavior and economic influences
Changing market dynamics also play a role. Pricing pressures are forcing Apple to take unusual actions such as discounting, suggesting that competition has become more intense and consumers' price sensitivity may have increased. In addition, consumer behavior appears to be changing. Chinese consumers are showing a growing preference for domestic brands, perhaps due to technological advances by local manufacturers but also a stronger national consciousness. Supporting domestic products plays a role that should not be underestimated in China.
Economic factors could also play a role. Economic challenges and subdued consumer sentiment could affect sales of premium smartphones such as the iPhone. Uncertainties in the economy often lead to reluctance to make larger purchases. In addition, exchange rate fluctuations between the U.S. dollar and the Chinese yuan could affect the pricing and competitiveness of Apple products. A strong dollar can make Apple products more expensive for Chinese consumers.
A combination of technological developments, intense competition, changing market dynamics and economic factors have led to Apple's significant decline in the Chinese smartphone market. The company faces the challenge of repositioning itself in this important market and responding to the changing needs and preferences of Chinese consumers in order to maintain its competitiveness. The coming years will show whether Apple will be able to regain its former top spot or whether the new distribution of power in the Chinese smartphone market will become permanently established.
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