China Smartphone Sales Dip 9% Over Singles' Day Festival

The Singles' Day shopping festival, China's largest online retail event, has traditionally been a boon for smartphone sales. However, this year, the market experienced a 9% year-over-year (y/y) drop in smartphone sales during the festival, reaching 9.5 million units. Despite the extended promotional period and the growth of livestreaming sales, the overall market witnessed a decline, highlighting the impact of economic downturn headwinds and saturated online penetration rates.

The economic downturn and changing consumer spending patterns significantly influenced smartphone sales during the festival. Although the longer promotional period led to a 26% y/y increase in sales volume, revenue growth was behind, with a lower average selling price (ASP) yoy, indicating a polarization pattern. Livestreaming, which accounted for about 22% of market share by GMV, continued to grow, with sales from top-tier livestreamers surpassing 100 million yuan within a short period. Nevertheless, the overall market experienced a 9% y/y decline, reflecting the impact of economic downturn headwinds and saturated online penetration rates.



The intense competition among domestic and international smartphone vendors also played a role in the sales decline. Despite the overall drop, Apple re-entered the top 5 smartphone companies, driven by the launch of the iPhone 16 series. Domestic OEMs like vivo, Huawei, and Xiaomi contributed to the 3.8% growth in the Android market, each achieving robust double-digit growth. Xiaomi approached Apple in market share, while vivo surpassed Honor. The competition among these vendors, coupled with the longer promotional periods and the early release of flagship models, drove sales. However, the saturated online penetration rate, overcomplicated saving rules, and economic downturn headwinds also played a role in the overall sales decline.

Chinese smartphone vendors have adapted their product portfolios to cater to evolving consumer preferences and price points. According to TechInsights, Xiaomi has approached Apple in terms of market share, boosted by growth in entry- to mid-tier segments. vivo has surpassed Honor to rank third, while Huawei maintained its third position by value, with the highest ASP among Chinese vendors. This shift indicates a focus on affordable yet competitive devices, aligning with consumers' budget-consciousness. Additionally, the rise of livestream sales, accounting for 22% of GMV, demonstrates vendors' efforts to engage with consumers through innovative channels.

Promotional strategies and pricing tactics have been crucial for Chinese smartphone vendors to boost sales during the Singles' Day shopping festival. Longer promotional periods, such as pre-sales starting 8-12 days earlier, have significantly contributed to the 26% yoy growth in smartphone sales during the 11.11 festival (TechInsights). This strategy allowed vendors to capture consumer attention and encourage early purchases. Additionally, aggressive pricing tactics, like offering lower ASPs, have been employed to attract budget-conscious consumers. Xiaomi, for instance, has successfully catered to this segment, approaching Apple in market share (TechInsights). Furthermore, the polarization pattern, where vendors focus on both entry- to mid-tier and high-end segments, has also driven sales. For example, vivo surpassed Honor and ranked third in terms of volume, while Huawei maintained its third position by value, with the highest ASP among Chinese vendors. These promotional strategies and pricing tactics have been vital in helping Chinese smartphone vendors navigate the competitive market and boost sales during the crucial Singles' Day shopping festival.

In conclusion, the 9% y/y drop in China smartphone sales during the Singles' Day shopping festival can be attributed to several factors, including the saturation of the online penetration rate and overcomplicated saving rules. Despite the growth of livestreaming sales and the extended promotional period, the overall market experienced a decline, highlighting the impact of economic downturn headwinds and saturated online penetration rates. Chinese smartphone vendors have adapted their product portfolios and employed promotional strategies to cater to evolving consumer preferences and price points, driving sales during the festival. As the market continues to evolve, investors should closely monitor these trends and assess the long-term potential of these companies.