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Mobile Phones - China - February 2017

Published By :

Mintel

Published Date : Mar 2017

Category :

Telecommunications

No. of Pages : N/A

In the saturating mobile phone market, replacement purchase is the key driver as consumers show the potential to trade up. This is especially the case for lower tier cities and rural areas. Brands should focus on offering outstanding premium phones and also pay attention to developing offline retail channels to win in lower tier markets.

Table of Content

OVERVIEW

What you need to know
Covered in this report
Personal income

EXECUTIVE SUMMARY
The market
A slow growth, and estimated to continue
Figure 1: Volume sales of mobile phones in China, 2011-21
Premiumisation fuels market growth, and offline channels remain important
Companies and brands
Huawei leads volume share, followed by OPPO and Vivo
Xiaomi, Apple and Samsung face challenges
Figure 2: Leading mobile phone brands in China, by volume share, 2015-16
The consumer
Huawei enjoys increase among tier one, two and three cities
Figure 3: Brands of current smartphones and ranking change, October 2016 and November 2016
Purchase intention dropped in 2016
Mid earners and lower tier cities should be the focus to attract purchase
Figure 4: Smartphone purchase intention in the next 6 months, October 2015 and November 2016
Huawei continues to win consumers’ favour
Figure 5: Intended smartphone brands, October 2014, October 2015 and November 2016
The less expensive current smartphones, the higher upgrade degree
Figure 6: Price range of current smartphones and future purchase budget, November 2016.
Product rather than brand driven
Figure 7: Smartphone purchase motivation, November 2016.
Both online and offline channels are important, but play different roles
Figure 8: Attitudes towards online and offline channels for mobile phone purchase, November 2016
Always going for the latest models
What we think

ISSUES AND INSIGHTS
Online and offline channels play different roles
The facts
The implications
Figure 9: Xiaomi Home, Shanghai, February 2016
Attracting purchases in the saturated smartphone market
The facts
The implications
Brands should enrich their product portfolios
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Mobile phone market grows slowly yet steadily
Premiumisation drives market value growth
Smartphone growth slows down, as does 4G mobile phone growth

MARKET SIZE AND FORECAST
Mobile phone market maintained slow yet steady growth in 2016
Figure 10: Volume sales of mobile phones in China, 2011-16
Figure 11: Value sales of mobile phones in China, 2011-16
Mobile phone market estimated to continue steady growth with slight acceleration
Figure 12: Volume sales of mobile phones in China, 2011-21

MARKET FACTORS
Consumers trading up to premium smartphones fuels market value growth
Offline channels remain important
4G transition is no longer a key growth driver

MARKET SEGMENTATION
4G devices make 96% of total mobile phone volume, but no longer a key driver
Figure 13: Volume sales of smartphones and non-smartphones in China, 2011-16
Figure 14: Volume sales of 2G, 3G and 4G mobile phones in China, 2014-16

KEY PLAYERS – WHAT YOU NEED TO KNOW
Huawei, OPPO and Vivo won in 2016, while Xiaomi, Apple and Samsung lost share
Brands are offering premium models
Opening bricks-and-mortar stores in lower tier markets, and leveraging the power of celebrities
Innovative screen design and limited/special edition to increase appeal

MARKET SHARE
Huawei is the biggest winner in 2016, followed by OPPO and Vivo
Xiaomi, Apple and Samsung losing volume share
Fewer product lines, more specific target audience
Figure 15: Leading mobile phone brands in China, by volume share, 2015-16
A more concentrated smartphone market, in terms of value sales
Figure 16: Leading mobile phone brands in China, by value share, 2015-16

COMPETITIVE STRATEGIES
Offering premium models to satisfy consumers’ evolving needs
Bricks-and-mortar stores winning in lower tier markets
Continuing the power of celebrity endorsement
Enriching product portfolio for new growth or spreading the risk

WHO’S INNOVATING?
Differentiating screen design to increase appeal
Limited or special editions to attract sophisticated consumers

THE CONSUMER – WHAT YOU NEED TO KNOW
Domestic brands dominate with Huawei taking the lead
Purchase intention sees decline, while lower tier markets show potential
Huawei expected to strengthen advantage
Consumers show potential to upgrade their smartphones
Function and design upgrade can motivate purchase
Online and offline purchase channels both appeal, while consumers trust online information more
About half of buyers would always choose the latest models

CURRENT SMARTPHONE BRANDS
Huawei ranking up and Xiaomi faces challenge
Figure 17: Ranking comparison of top 5 smartphone brands, October 2015 and November 2016
Domestic brands dominate
Figure 18: Brands of current smartphones, November 2016

PURCHASE INTENTION
A drop in purchase intention
Figure 19: Smartphone purchase intention in the next 6 months, October 2015 and November 2016
Who are likely to buy smartphones?
Figure 20: Smartphone purchase intention in the next 6 months, by personal income and city tier, October 2015 and November 2016
No big difference by brand owners
Figure 21: Smartphone purchase intention in the next 6 months, by current smartphone brand, November 2016

INTENDED BRANDS
Apple and Samsung are losing appeal, while Huawei is biggest winner
Figure 22: Intended smartphone brands, October 2014, October 2015 and November 2016
Brand loyalty is relatively low
Figure 23: Loyal users of leading brands, October 2015 and November 2016

SMARTPHONE PRICE RANGE
Average spending and budget for future purchase reduce …
Figure 24: Average price of current smartphones and future purchase budget, October 2014 and November 2016.
 yet consumers still want to upgrade their smartphones
Figure 25: Price range of current smartphone and future purchase budget, November 2016.
20-24-year-olds show strong upgrade potential
Figure 26: Average price of current smartphone and future purchase budget, by demographics, November 2016.

SMARTPHONE PURCHASE MOTIVATION
New function and appearance drive purchase
Figure 27: Smartphone purchase motivation, November 2016.
Trade-in programmes can attract those who have not made up their mind
Figure 28: Smartphone purchase motivation, by purchase intention in the next 6 months, November 2016.
Appearance and design is important to attract the 20s, while WOM reputation matters to 30s and 40s
Special/limited editions still attract high earners
Figure 29: Smartphone purchase motivation, by age and personal income, November 2016.

ATTITUDES TOWARDS MOBILE PHONE PURCHASE
Online versus offline channels
Not an either/or question
Figure 30: Attitudes towards online and offline channels for mobile phone purchase, November 2016
Xiaomi users prefer buying mobile phones online, while Huawei users do not show specific preference
Figure 31: Attitudes towards online or offline channels, by demographics, November 2016
When to buy a new phone
Most consumers do not wait until their phone breaks to get a new one
Figure 32: Attitudes towards mobile phone purchase, November 2016
30s are an important target group
Figure 33: Attitudes towards mobile phone purchase, November 2016
Accessories or not
Accessories can be an added-value feature to increase appeal
Figure 34: Attitudes towards mobile phone accessories, by demographics, November 2016

MEET THE MINTROPOLITANS
Mintropolitans prefer Huawei and Apple
Figure 35: Current smartphone brands, by consumer classification, November 2016
Greater drop of purchase intention among Mintropolitans
Figure 36: Smartphone purchase intention in the next 6 months, by consumer classification, November 2016
Non-Mintropolitans show higher upgrade rate
Figure 37: Average price of current smartphone and future purchase budget, by consumer classification, November 2016
Adopting latest technology and modular design appeals to Mintropolitans
Figure 38: Smartphone purchase motivation, by consumer classification, November 2016
Online and offline channels are both important
Figure 39: Attitudes towards mobile phone purchase, by consumer classification, November 2016

APPENDIX – MARKET SIZE AND FORECAST
Detailed market size and forecast table
Figure 40: Volume sales of mobile phone market in China, 2011-21
Figure 41: Value sales of mobile phone market in China, 2011-16

APPENDIX – MARKET SEGMENTATION
Detailed market segmentation table
Figure 42: Volume sales of mobile phone market in China, by market segment, 2011-16

APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations

List of Table

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