Domestic smartphone sector cools

The growth momentum of the world's largest smartphone market has come to an end, with China's smartphone shipments suffering a 4 percent decline year-on-year in 2017, marking the country's first-ever annual decline in the field.

According to research firm Canalys, shipments dropped to 459 million handsets last year, a decline that they noted was "faster than expected". Experts said the fall was partly due to one of the country's worst year-on-year performances in the fourth quarter, with shipments plummeting by over 14 percent to fewer than 113 million smartphones.

"Also, the Chinese market is now driven by replacement users, most of whom have already upgraded their handsets," said Jia Mo, an analyst at Canalys.

Despite the overall market dip, Huawei Technologies Co Ltd saw its best-ever quarter at home, reporting a 9 percent rise to more than 24 million handsets shipped in the fourth quarter. "Huawei's push into third and fourth-tier cities has yielded positive results, with its products, including the Nova and Honor brands, successfully gaining share from smaller vendors, such as Gionee and Meizu," Jia said.

"Honor's performance has also complemented Huawei's success, by contributing more than half of the company's total shipments. But competition between Huawei and Honor is getting fierce, and Huawei must deal with possible internal cannibalization," he added.

Xiang Ligang, CEO of telecoms industry website Cctime, said the declining industry trend will continue in 2018, which means the "freezing cold winter" for Chinese smartphone vendors has arrived.

"With Lenovo Group Ltd and ZTE Corp refocusing on the Chinese market in 2018, competition will intensify among vendors outside the top five. There is little room left for the smaller vendors," Xiang said.

According to him, overseas markets will play a pivotal role in Chinese companies' future expansion. But, it will be highly challenging for them to expand their presence in foreign countries－a feat that usually demands higher operating and marketing costs－while growth on their home turf slows down.

Oppo Electronics Corp, a major Chinese smartphone vendor, announced last week that it will soon expand into Japan and European countries.