Chinese smartphone market shrinks for first time in six years

The Chinese smartphone market, the world's biggest, has contracted for the first time in six years in the first quarter due to ''market saturation'', according to a new report by market intelligence firm IDC.

The Chinese smartphone market has shrunk over 4 per cent year-on-year with 98.8 million units shipped in Q1 2015.  Over the previous quarter, the market has contracted 8 per cent on the back of large inventory build up towards the end of the year.

The IDC data suggests a slowdown in the Chinese smartphone market.

"Smartphones are becoming increasingly saturated in China,'' said Kitty Fok, managing director at IDC China.

Like the developed markets of US, UK, Australia and Japan, convincing existing users as well as feature phone users to upgrade to new smartphones will now be the key to further growth in the China market, IDC said.

Apple with its iPhone 6 and iPhone 6 Plus, was the leader in the Chinese smartphone market in the first quarter with shipment volumes of 14.5 million units, registering a 62-per cent growth and a market share of 14.7 per cent. The company made record $16.8 billion revenue in China in the last quarter.

In contrast, shipments of global leader Samsung plunged 53 per cent to 9.6 million sets, pushing it down to the fourth position with a market share of 9.7 per cent.

Xiomi, the startup smartphone maker with a valuation of $46 billion, was in second position with 13.5 million units and a market share of 13.7 per cent, clocked a year-on-year growth of 42 per cent. That was followed by Huawei with shipments of 11.2 million, registering 40-per cent growth and a market share of 11.4 per cent.

Lenovo including Motorola came fifth with 22 per cent drop in sales to 8.2 million units and a market share of 11.2 per cent.

According to the data tracker, growth in the Chinese smartphone market is expected to be flat in 2015.

With the domestic market getting saturated, Chinese smartphone vendors are expected expand its presence in India as well as other Southeast Asian countries this year.

Xiomi has already made strong inroads into the Indian market through its online partnership with Flipkart and said last month that it will also sell its phones at The Mobile Store retail chain throughout the country.