Foreign Smartphone Brands Face 21% Plunge in China: CAICT Data Reveals

Ladies and gentlemen, buckle up! The smartphone market in China is in the midst of a seismic shift, and foreign brands are feeling the tremors. According to the latest data from the China Academy of Information and Communications Technology (CAICT), foreign-branded smartphone shipments in China plummeted by a staggering 21% year-on-year in January 2025. This is a wake-up call for anyone invested in the global tech scene. Let's dive into the details and figure out what's driving this dramatic decline.

First things first, the numbers are alarming. Foreign smartphone shipments in China dropped to 3.74 million units in December 2024, up from 3.72 million units a year earlier. This slight increase in December followed a prolonged slump, with foreign smartphone shipments falling for four consecutive months before December’s modest rebound. In November alone, shipments plummeted by 47.4% year-on-year, dropping to 3.04 million units from 5.77 million. This sharp decline underscores the growing intensity of competition faced by foreign companies as they navigate the complex and rapidly evolving Chinese market landscape.

Now, let's talk about the elephant in the room: Apple. The tech giant is feeling the heat, struggling with economic stress, reduced consumer spending, and growing competition from local brands like Huawei. Huawei has strengthened its market presence, recording a 24% increase in smartphone shipments in the same quarter. The company now holds a 17% market share, closely trailing Apple’s 13.1 million units sold in China. Huawei’s resurgence has been driven by the introduction of smartphones with locally produced chipsets, which have interested consumers, especially those who favor homegrown technology.

Apple, in an effort to retain its foothold in China, has partnered with Alibaba to integrate artificial intelligence features into iPhones sold in China, leveraging Alibaba’s technology to better tend to local preferences. However, this initiative remains subject to regulatory approval. Analysts are cautious about Apple’s prospects in the Chinese market nonetheless. The upcoming iPhone SE4 is not expected to drive high sales, as previous SE models have had limited impact. Again, speculation that the iPhone 17 series may rely entirely on eSIM technology is not sitting well with consumers, given China’s limited carrier support for eSIM.

The competitive landscape in China's smartphone market has evolved significantly, with domestic brands like Huawei and Vivo gaining substantial market share. According to data from the China Academy of Information and Communications Technology (CAICT), domestic branded handset shipments in November 2024 reached 26.6 million units, up 4.4% year-on-year, accounting for 89.7% of the total smartphones shipped in the country. This marked a significant increase from the 79.1% proportion in October 2024. Across the first 11 months of 2024, domestic branded smartphone shipments were up 15.2% year-on-year to 238 million units, accounting for 85.1% of the total.

Huawei, in particular, has made a strong comeback, securing second place for the full year 2024 with over 50% shipment growth, supported by improvements in supply chain capability. Vivo led the market in 2024, driven by its user-centric approach across all price segments and focus on both hardware and software development. Vivo's strategy of distinct product positioning across its main and sub-brands has been particularly effective. Huawei's resurgence has been driven by the introduction of smartphones with locally produced chipsets, which have interested consumers, especially those who favor homegrown technology. Huawei's HarmonyOS NEXT and Xiaomi's HyperOS, along with in-house chips and foldable form factor breakthroughs, have captivated high-end users and driven them to upgrade their devices.

Foreign brands, particularly Apple, have faced significant challenges. Apple's market share and shipments shrank in 2024 due to increased competition and uncertainty around the launch of Apple Intelligence in China. In response, Apple has partnered with Alibaba to integrate artificial intelligence features into iPhones sold in China, leveraging Alibaba’s technology to better tend to local preferences. However, this initiative remains subject to regulatory approval. Apple has also launched rare promotional campaigns, offering price reductions of up to 500 yuan on its flagship devices, and plans to implement discounts during the upcoming Lunar New Year festivities to sway consumer sentiment.

The competitive landscape has also seen other foreign brands struggling with economic issues. A downturn in consumer spending, coupled with the economic slowdown, has dampened demand. Foreign smartphone shipments in China saw a steep decline in November 2024, plummeting by 47.4% year-on-year to 3.04 million units. This was the fourth consecutive month of declining sales for non-Chinese brands. The current increase in foreign smartphone shipments to 3.74 million units in December 2024, up 0.6% year-on-year, follows a prolonged slump and indicates a modest rebound.

In summary, the resurgence of domestic brands like Huawei and Vivo has significantly altered the competitive landscape in China's smartphone market. These brands have leveraged their understanding of local consumer preferences and technological advancements to gain market share. Foreign brands, particularly Apple, are employing strategies such as partnerships, promotional campaigns, and regulatory compliance to regain market share in the face of intense competition.