Foreign-Branded Phones in China: A Glimmer of Hope Amidst Market Growth

The China Academy of Information and Communications Technology (CAICT) recently reported a 0.6% year-on-year increase in shipments of foreign-branded smartphones in China for December 2024. While this growth rate may seem modest, it is a positive sign for foreign brands operating in the world's largest smartphone market. This article will delve into the factors contributing to this growth, the implications for foreign brands, and the strategies employed by these brands to maintain or increase their market share in China.

Factors Contributing to the Growth of Foreign-Branded Smartphone Shipments

Several factors have contributed to the 0.6% year-on-year increase in shipments of foreign-branded smartphones in China in December 2024:

1. Government Subsidies: The Chinese government initiated subsidies in some provinces and cities, which drove new product launches and boosted overall smartphone shipments. This policy is expected to continue supporting the market recovery in 2025 (IDC, January 28, 2025).
2. Pent-up Demand: After two years of decline, the smartphone market experienced a recovery in 2024 due to pent-up demand. This demand was fueled by consumers who had delayed their purchases during the challenging years (IDC, January 28, 2025).
3. Innovations: Technological advancements like GenAI (Generative Artificial Intelligence) also contributed to the market growth. These innovations captivated high-end users and drove them to upgrade their devices (Canalys, January 2025).
4. Value-seeking Trend: Consumers became more selective in their purchasing decisions, seeking better value for their money. This trend led to intense competition among vendors, encouraging them to offer affordable products with premium designs and robust durability (IDC, January 28, 2025).
5. Market Education: Vendors actively sought to expand investments in their advantageous fields, such as online and offline channels, partnerships with operators, and marketing efforts. This strategy helped solidify their positions in various price segments (Canalys, January 2025).
6. Seasonal Promotions: Vendors drove sales through seasonal promotions, such as the high-end peak season and year-end promotions, which contributed to the overall increase in shipments (Canalys, January 2025).

Implications for Foreign Brands Operating in the Chinese Market

The 0.6% year-on-year increase in shipments of foreign-branded smartphones in China in December 2024 is a positive sign for foreign brands, but it is essential to consider the overall market growth and the dominance of domestic brands. Domestic branded smartphone shipments in China grew by 4.4% year-on-year in November 2024, reaching 89.7% of the total smartphone shipments in the country. This growth rate is higher than the overall smartphone market growth in China during the same period, which was 5.1% year-on-year in November 2024.

The increasing dominance of domestic brands in the Chinese smartphone market indicates that foreign brands may face further challenges in maintaining their market share and profitability. As domestic brands continue to innovate and improve their products, they may be able to capture a larger share of the market, leaving less room for foreign brands to compete. Additionally, the increasing popularity of domestic brands may lead to a decrease in consumer demand for foreign-branded smartphones, further impacting the market share of foreign brands in China.

Strategies Employed by Foreign Brands to Maintain or Increase Market Share in China

Foreign brands like Apple have employed several strategies to maintain or increase their market share in China, with varying degrees of success. Here are some key strategies and their effectiveness:

1. Product Innovation and Premiumization: Apple has consistently focused on innovation and premiumization, launching new features and technologies like Face ID, 5G, and advanced cameras. This strategy has helped Apple maintain its high-end market share and attract affluent Chinese consumers. For instance, in Q4 2024, Apple achieved the number 1 spot for the quarter, with shipments reaching 13.1 million units (Canalys). However, increased competition from domestic brands has led to a decline in Apple's market share and shipments in 2024 (IDC).
2. Channel Management and Retail Experience: Apple has enhanced its retail experiences through channel management, offering trade-in programs, and expanding coverage of interest-free installment plans. These strategies aim to improve customer satisfaction and drive sales. For example, Apple's iPhone 16 series maintained the top spot in Q4 2024 but faced growing competitive pressure from domestic flagship devices (Canalys).
3. Government Subsidies and Promotions: Apple has leveraged government subsidies and promotions, such as those announced in 2025, to drive sales and market growth. These initiatives can help Apple capitalize on the recovery in the smartphone market (IDC).
4. Partnerships and Marketing Efforts: Apple has strengthened partnerships with operators and leveraged marketing efforts to solidify its position in the market. For instance, vivo's success in the Chinese market can be attributed to its capitalization on opportunities across online and offline channels, partnerships, and marketing strategies (Canalys).

While these strategies have helped Apple maintain a presence in the Chinese market, the intense competition from domestic brands like vivo, Huawei, Xiaomi, and OPPO has led to a decline in Apple's market share and shipments in 2024. To continue capitalizing on the recovery, Apple must adapt to the shifting consumer behavior and value-seeking trend prevalent in China and globally (IDC).

In conclusion, the 0.6% year-on-year increase in shipments of foreign-branded smartphones in China in December 2024 is a positive sign for foreign brands operating in the world's largest smartphone market. However, the intense competition from domestic brands and the increasing dominance of domestic brands in the market pose significant challenges for foreign brands. To maintain or increase their market share in China, foreign brands must adapt to the shifting consumer behavior and value-seeking trend, innovate and improve their products, and leverage government subsidies and promotions. By doing so, foreign brands can capitalize on the recovery in the smartphone market and solidify their position in the Chinese market.