vivo and OPPO edge out Xiaomi and HUAWEI as China’s top phone makers

The smartphone market in China has gone through a shift in competitive landscape recently, as Vivo and OPPO seized the top spots from long-time market leaders Xiaomi and Huawei. A new report from Counterpoint Research reveals that OPPO snagged 16.6 percent market share while vivo captured 16.2 percent of the market from July to September of this year.

It’s a kind of rags-to-riches story for vivo and OPPO, which accounted for only 8.2 percent and 9.9 percent of the market respectively during the third quarter of 2015 compared to HUAWEI’s 15.6 percent and Xiaomi’s 14.6 percent. In Counterpoint’s latest report, however, HUAWEI is now trailing in third spot, with 15 percent of market share.

China’s former top phone maker Xiaomi comes in at number four with a market share of 10.6 percent, followed by Apple with 8.4 percent.

James Yan, research director at Counterpoint Research, noted that OPPO’s smartphone shipments increased by 82 percent year over year, courtesy of strong demand for the company’s flagship OPPO R9. According to Counterpoint, the OPPO R9 dominated sales in China during Q3 of 2016, overthrowing Apple’s iPhones.

Meanwhile, vivo’s phone shipments grew 114 percent annually, thanks to a robust demand for its flagship X7 series aided in no small way by its offline retail presence. Mr. Yan went on to say that:

“The focus on traditional offline retail and wider distribution network which still constitutes three-fourth of smartphone demand has been key to OPPO and vivo success.”

While OPPO and vivo are enjoying strong growth in shipments, previous market leader HUAWEI saw only a 4 percent rise in shipments during Q3 2016, though it still managed to snag 15 percent of the market. Counterpoint Senior Analyst MengMeng Zhang believes, however, that the upcoming HUAWEI Mate 9 flagship could help bring back some of the company’s lost market share.

Xiaomi also saw sluggish growth in shipments in Q3 2016, managing only a 1 percent increase. Zhang attributes the drag to Xiaomi’s lack of offline presence, noting that the phone maker’s online business model has reached its peak. Zhang went on to say:

“Xiaomi needs a hero flagship device in premium to drive mindshare to compete with much more focused R&D and manufacturing driven brands such as OPPO, vivo, Apple and HUAWEI. Also, lack of presence in offline space has been one of the determinants for Xiaomi’s slowing growth as its e-commerce driven business model has hit a ceiling.”

On the other hand, Apple had generally slow growth in China this year, though Counterpoint believes the iPhone 7 will help the Cupertino giant grow its market share sequentially in Q4 2016.

Do any of these changes surprise you? Who do you think will come out on top next year?