IDC: growth streak ends for China smartphone market
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IDC: growth streak ends for China smartphone market

After nine consecutive quarters of explosive growth, which propelled China into the top smartphone market in the world, the China smartphone market experience its first slowdown in the fourth quarter of 2013 (2013 Q4), according to IDC (http://www.idc.com).

According to the the research group, the market shipped 90.8 million units compared to 94.8 million in 2013 Q3, declining by 4.3% quarter on quarter. Several factors drove this stumble. For one, China Mobile’s 4G TD-LTE network went live on December 18, translating into supplies of 4G handsets not able to reach the market fully until 2014 Q1. The increasing popularity of phablets and channel inventory also played a role, whereby operators cut phone subsidies on phones with smaller screens, triggering distribution channels looking to clear out those stocks.

"The world has increasingly looked to China as the powerhouse to propel the world’s smartphone growth and this is the first hiccup we’ve seen in an otherwise stellar growth path," says Melissa Chau, senior research manager with IDC Asia/Pacific's Client Devices team. "There will certainly be future drivers to unlock further smartphone growth in China, as Apple demonstrated with its China Mobile tie-up in January, and the massive device migration to come of phones only supporting 2G and 3G networks to devices supporting 4G networks. However, we are now starting to see a market that is becoming less about capturing the low-hanging fruit of first time smartphone users and moving into the more laborious process of convincing existing users why they should upgrade to this year’s model."

Looking ahead at the prospects for the Asia/Pacific (excluding Japan) region, with mature Asia/Pacific markets like already having hit market saturation and China growth facing more moderate increases, IDC says two trends will become more prominent.

First, growth will increasingly shift to ever-more emerging markets. While India volumes significantly lag China, India has taken the number three ranking of largest smartphone markets in the world in 2013, surpassing Japan, the United Kingdom, South Korea, Germany and France, which were all ranked higher in 2012.

Second, Chinese phone players which have previously been content to make their mark on the China market itself, are looking to expand their ambitions overseas. While this trend has started already through 2013, IDC expects it to become more common in 2014.

"Chinese players are getting hungrier to turn themselves into international rather than China-only brands," says Chau. "Nowhere is this more clear than Lenovo’s acquisition of Motorola’s handset business, and even smaller players, some unknown to much of the world, like Oppo, BBK, Gionee and of course Xiaomi are ramping up on international expansion."

 
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