China: the smartphone market in freefall

Beijing’s zero Covid policy has had a lasting effect on consumption in the country.

Sales are lower than in 2021

Until recently, Beijing’s roadmap was clear: eradicate the spread of Covid-19. This involved the implementation of targeted and particularly strict lockdowns, with the prohibition for residents to leave their homes. Although China has just lifted these measures and even reversed them, the consequences of the zero Covid policy are still being felt; in addition, the virus is now spreading so rapidly that the trend could remain similar. Experts expect at least 1 million deaths from Covid-19 this winter in the country.

Affecting production and the supply chain negatively, this policy also forced Chinese people to postpone their purchases. As a result, smartphone sales are down compared to last year. According to the China Academy of Information and Communications Technology (CAICT), a scientific research institute under the Ministry of Industry and Information Technology, 214.5 million smartphones were shipped to the country from January to October 2022, compared to 275.3 million units during the same period in 2021.

For the month of October alone, the volume of shipments on the world’s largest smartphone market fell 27.2% to 23.8 million units, according to CAICT data. This total, however, is up 20% from September, when the volume reached 19.8 million units, according to the South China Morning Post.

Brands suffer

The decline in smartphone deliveries directly affects manufacturers. In great difficulty, Xiaomi recently announced the layoff of 10% of its staff, after three consecutive quarterly losses.

Apple, which concentrates 90% of the production of its iPhone in the Middle Kingdom, is also suffering from the situation. Its supply chain is greatly threatened, and the company risks not being able to deliver enough smartphones. Its largest factory, managed by Foxconn, has indeed been plagued by major outbreaks, greatly slowing its production.

According to analysts, the decline in the smartphone market in the country should slow down in 2023, while a rebound is expected in 2024.