China’s Smartphone Market Plunges; Apple Inc. (NASDAQ:AAPL) Falls Out Of The Country’s Top-4 Sellers

China’s smartphone sales recorded a drop in the first quarter of 2018. This is according to a new survey released by Canalys, an independent analyst company.

According to Canalys’ report, which was published on Thursday, China saw a 21% decline in smartphone shipments annually to 91 million units, with eight of the top 10 leading vendors recording a drop in sales.

Apple Inc. (NASDAQ:AAPL) was once again displaced from its fourth by local company Xiaomi, which also saw the highest shipments. Xiaomi recorded 37% increase in shipment to 12 million units. In the fourth quarter of 2017, Apple came a head of Xiaomi by a very narrow margin according to Canalys. The leading brand was Huawei and managed to increase shipment by 2%

According to the report, China’s smartphone sector is increasingly being dominated by four domestic brands: Huawei, Oppo, Vivo and Xiaomi. The local companies accounted for over 73% of total shipments in the country during the first quarter.

Manufacturers outside the top five saw a drop in their market share by 19 % in the first quarter and according to the report, more consolidation in the market is expected.

Mo Jia, an analyst at Canalys said that the cost of channel management and marketing in a big country, the size of China is very big and only companies that have reached some size can withstand. He added that although local brands like Xiaomi, Vivo, Oppo and Huawei are experiencing a drop in the market, they can take comfort from the fact that the market will continue to consolidate.

However, the report did not come as a complete surprise. At the start of this year, Canalys analyst Nicole Peng was quoted saying that Huawei and Xiaomi are the dominant players in the Chinese market.

This was confirmed by Canalys analyst Hattie He who noted that Xiaomi is the only brand among the top five which is fully focused on sub-RMB1,000 price section and accounts for about 90% of its shipment to Redmi. He said this while referring to the company’s budget smartphones.

However, according to the report, the market is expected to return to growth in the second quarter with Huawei, Vivo and Oppo expected to unveil new devices.