Published on: January 20, 2025 / Updated on: January 20, 2025 – Author: Konrad Wolfenstein
China's smartphone market is shaken up: Vivo and Huawei dominate, Apple falls behind – Is the foldable phone the new star? – Image: Xpert.Digital
Changes in the Chinese smartphone market
Shift in 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-standing heavyweight, is coming under increasing pressure.
Apple's decline in China
The latest market data reveals a significant decline for Apple in China. In 2024, the company fell to third place among the largest smartphone vendors. Market research firms like Canalys report Apple's largest annual revenue decline in China to date, with shipments dropping a substantial 17 percent for the year. This 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 manufacturer 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. Particularly striking is that this downward trend for Apple continued through all four quarters of the year, even registering a 25 percent drop 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 issue is the lack of advanced AI features in the latest iPhone models offered there. Especially in a market characterized by rapid technological advancements and a high affinity for artificial intelligence, this could be a significant disadvantage. Chinese consumers are showing a growing interest in smart features that simplify everyday life and offer personalized experiences.
Strong domestic competition
Another important factor is the strong competition from domestic brands like Huawei and Vivo, which have increasingly focused on innovative technologies in recent years. These companies understand how to specifically address the needs and preferences of Chinese consumers and offer attractive alternatives to the iPhone. This includes the growing prevalence of foldable smartphones in the high-end segment. While Apple does not yet offer such a model, foldable devices are enjoying increasing popularity in China and could be a decisive selling point for tech-savvy buyers. These devices are often perceived as status symbols and offer innovative functionalities that conventional smartphones do not.
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 experienced an impressive resurgence. In the fourth quarter of 2024, Huawei recorded a 24 percent increase in shipments. This success is largely due to Huawei's ability to offer technologically advanced products that resonate with Chinese consumers, despite international challenges. The development of its own chipsets is often perceived as a sign of national strength and technological independence, which further enhances its appeal among certain segments of the population.
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, a four-day promotion in China offered discounts of up to 500 yuan (approximately US$68.50) on iPhone 16 models. Such price reductions are rather atypical for Apple and indicate the growing pressure the company is facing in China.
Recovery of the Chinese smartphone market
Despite the challenges facing Apple, 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 smartphone demand is picking up again after the market declined over the previous two years. This upswing could be attributed to several factors, including a gradual economic recovery and the launch of new, attractive models from various manufacturers.
Technological and economic challenges
Technological gaps
The technological gaps, particularly the lack of advanced AI features in iPhones for the Chinese market, could be a decisive factor in Apple's decline. Chinese consumers are increasingly tech-savvy and expect innovative features that enrich their daily lives. The absence of a foldable iPhone could also cost Apple market share, as these devices are becoming increasingly popular in the premium segment and are seen as pioneers of modern smartphone technology.
Strong domestic competition
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 market. Other Chinese manufacturers like Vivo are also impressing with innovations and designs 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
The changing market dynamics also play a role. Price pressure is forcing Apple to take unusual measures such as price reductions, suggesting that competition has intensified and consumers may have become more price-sensitive. Furthermore, consumer behavior appears to be shifting. Chinese consumers are showing a growing preference for domestic brands, possibly due to technological advancements by local manufacturers, but also to a stronger sense of national identity. Supporting domestic products plays a significant role in China.
Economic factors could also play a role. Economic challenges and subdued consumer sentiment could negatively impact sales of premium smartphones like the iPhone. Economic uncertainty often leads to reluctance to make major purchases. Furthermore, exchange rate fluctuations between the US 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 advancements, intense competition, shifting market dynamics, and economic factors has led to Apple's significant decline in the Chinese smartphone market. The company faces the challenge of repositioning itself in this crucial market and responding to the evolving needs and preferences of Chinese consumers to maintain its competitiveness. The coming years will reveal whether Apple will be able to reclaim its former leading position or whether the new balance of power in the Chinese smartphone market will become permanent.
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