The New Coronavirus Deals a Direct Blow to China's Smartphone Market... 30% Sharp Decline in Q1

[Asia Economy Reporter Seulgina Jo] The world's largest smartphone market, China, is taking a direct hit due to the impact of the novel coronavirus (Wuhan pneumonia). Some analyses predict that shipments in the first quarter (January to March) could drop by as much as 30%.

According to market research firm IDC on the 7th, China's smartphone shipments in 2019 recorded 366.7 million units, down 7.5% from the previous year. This marks the third consecutive year of decline. Just three years ago, the Chinese market reached around 400 million units annually, but as smartphone penetration increased, the market shrank to around 300 million units starting in 2018.

This year, compounded by the outbreak of the novel coronavirus originating in Wuhan, China, an annual contraction of 4% is expected. As the death toll surpassed 500 and the situation worsened, many smartphone stores and major commercial facilities across China have been closing temporarily. IDC stated, "The crisis (novel coronavirus) hitting the Chinese domestic market in the first quarter will affect the entire year," adding, "The impact is inevitable not only for Chinese companies like Huawei but also for Apple's performance."

Shipments from January to March are estimated to decline by up to 30% compared to the same period last year. In particular, the drop for January and February is expected to approach 40%. However, IDC expects the overall market to gradually enter a recovery phase from the second quarter as the novel coronavirus situation stabilizes. IDC said, "It will not be easy to recover to the same level as the previous year’s quarter," but predicted, "As the impact of the novel coronavirus gradually disappears, the market will rebound in the second quarter or the second half of the year."

Last year, Huawei showed a clear growth trend in the Chinese smartphone market. Huawei's market share rose to 38.3%, jumping more than 10 percentage points from 26.5% the previous year. This was thanks to strengthened sales promotion within China after the U.S. administration under Donald Trump, amid the China trade war, placed Huawei on a blacklist and increased pressure in overseas markets. The so-called ‘patriotic purchasing’ demand also appears to have increased.

Following Huawei, Vivo ranked second with 18.1%, and OPPO took third place with 17.1%. Xiaomi ranked fourth with 10.9%. All these companies experienced a decline compared to a year ago. In the case of the U.S. company Apple, despite the release of new iPhones, its market share in China slightly decreased. Last year, Apple’s shipments in China fell 9.7% to 32.8 million units.