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"Increased dependence on mobile apps has led to consumers to seek phone upgrades, thus helping drive the large growth in 2016Q4. In lower tiered cities, there was a similar demand by consumers, which OPPO and vivo met by aggressively pushing mid-range smartphones in these cities," says Tay X iaohan, Senior Market Analyst with IDC Asia/Pacific's Client Devices team.
2016 was the first time ever that Apple saw a YoY decline in the PRC market. Even though the new black colored iPhones caught the attention of consumers, overall, the new launches did not create as much of a frenzy compared to the past.
Despite the decline, IDC does not believe Chinese vendors have actually eaten away Apple's market share. Most Apple users are expected to be holding out for the new iPhone that will be launched this year, and that will help the brand to see a growth in 2017. Apple's 10-year anniversary iPhone will also likely attract some of the high-end Android users in China to convert to an iPhone.
A key trend that stood out in 2016 was the slowdown of the growth of the online channel in China. There is no longer a single channel that is seeing exponential growth for smartphones unlike previous years. Most brands are now using a combination of channels to increase their shipments. Xiaomi, previously focused on online channels, has opened more Mi Home stores to drive offline growth.
Apple has also been aggressive in increasing its offline retail presence. Some vendors outside the top five vendor list in 2016, e.g. Gionee, also saw good growth in 2016 due to its expansion in the offline channel in the lower tiered cities. To differentiate itself from OPPO and vivo who predominantly target a younger audience, Gionee has been targeting professionals and executives, and hence found a niche market for itself to stand out against its two competitors.
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