China demand helps fuel smartphone market revival: GfK

Demand in emerging markets is helping to revive the flagging smartphone market, with GfK now revising its forecast for the value of smartphone sales from $400.7 billion to $426 billion for 2016.

 

That represents a 5% increase from a year previously. The Germany-based research company also said shipments this year are forecast to increase by 5.1 per cent to 1.39 billion units.

 

GfK noted that more positive trends are apparent in China as well as in emerging markets in Asia and Africa, adding that strong sales of more expensive devices has also reversed the previous trend of share gains by low-end smartphones costing less than $100.

 

Kevin Walsh, director of trends and forecasting at GfK, added that it is important to look beyond sales in the major cities and the shipments of global manufacturers to reveal this strong growth, “since it is consumers in rural areas driving this demand. With China being a key part of the trend, it is not surprising that it is local vendors who are benefitting the most.”

 

In the second quarter of 2016, smartphone sales in China increased 24% year-on-year to 109.7 million. GfK said this year-on-year growth improved from 19% in the first quarter of 2016 and is the highest seen for over two years.

 

It added that the strong growth was driven primarily by continued operator subsidies, which began in early 2016 and have helped drive strong 4G smartphone adoption in the smaller cities. Local brands have also benefitted from growth outside the major cities, seeing their share of the country’s smartphone market increase from 74% in Q2 2015 to 81% in Q2 2016

 

In a separate report, Gartner noted that five of the top-10 smartphone vendors increased sales in the second quarter of 2016. Of the five, four were Chinese vendors Huawei, Oppo, Xiaomi and BBK Communication Equipment while South Korea’s Samsung made up the total. Apple, meanwhile, saw sales decline by 7.7 per cent and registered its third consecutive quarter of slowing demand.

 

Other strong market revivals were also recorded in Central and Eastern Europe, where Q2 2016 sales increased by 12% year-on-year to 17 million units. Russia recorded an increase of 12 per cent compared to the previous year, ending five quarters of decline. In Ukraine, sales increased by as much as 35 per cent following six consecutive quarters of decline. GfK forecasts that smartphone demand in the region will increase to 77 million units in 2016, up 8 per cent year-on-year.

 

In Western Europe, on the other hand, sales fell 1% year-on-year to 30 million with Spain registering the sharpest decline of 11 per cent. Sales in North America also fell by 6% to 42 million in Q2 2016, while in Latin America they were down 8% at 23 million units. In the Middle East and Africa, sales slowed to 5% year-on-year to 41 million because of a 24% decline in Saudi Arabia.