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China Smartphone Sales Shrink, Market 'Increasingly Saturated,' Report Says

Analysts say so many people in China already have smartphones, to sell more units, manufacturers will have to convince them to upgrade.

Smartphone sales in China contracted by about 4 percent year-on-year from January through March, according to International Data Corporation, the American market analysis firm. Sales for the first quarter were just under 100 million. IDC says this is the first time in six years that the smartphone market in China declined year-on-year.

"Smartphones are becoming increasingly saturated in China," said Kitty Fok, Managing Director at IDC China, in a statement. "China is oftentimes thought of as an emerging market but the reality is that the vast majority of phones sold in China today are smartphones, similar to other mature markets like the US, UK, Australia, and Japan."

"Just like these markets," she says, "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."

That was fast.

Cellphones emerged in China in the late 1990s. Today, on the streets of Shanghai or in the farm fields of the country's interior, it's hard to find someone who doesn't own one.

Apple led phone sales in China in the first quarter with nearly 15 percent of the market. Sales were driven by desire for the big screens of the iPhone 6 and iPhone 6 Plus, IDC said. China's Xiaomi took second place with nearly 14 percent of the market. South Korea's Samsung fell from first to fourth place following a huge drop in sales, according to IDC.

The Wall Street Journal noted that other surveys showed the smartphone market continuing to grow, but at a much slower pace than in the past.

The Journal writes:

"Experts say the slowdown is largely driven by the disappearance of China's first-time buyers. Smartphones now have a more than 90% penetration rate in China, said Tom Kang, research director with market-research firm Counterpoint, meaning just about everybody in China who wants a smartphone already has one. 'China is now a replacement market,' Mr. Kang said."

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