Smartphone Shipments In China Fell 20 Pct In 2020

Shipments of smartphones in China tumbled 20 percent in 2020 as Chinese consumers continued to delay upgrading their phones.

The number of devices shipped domestically fell to 296 million in 2020, from 372 million in 2019, according to Reuters, which cited newly released Chinese government statistics.

Reuters said the shortfall reflects both consumers’ reluctance to replace their phones and pandemic-related disruptions to smartphone supply chains. The news agency noted that 2019 shipments were 4 percent lower than in 2018.

The data was furnished by the state-backed China Academy of Information and Communications Technology (CAICT).

China’s smartphone makers had hoped that Chinese consumers would seek to upgrade their devices to models compatible with the nation’s much-touted 5G network.

Domestic smartphone makers Oppo, Vivo and Xiaomi saw significant declines during the first half of 2020. Smartphone titan Huawei, meanwhile, was able to grow its domestic market share in the earlier part of the year, but saw sales taper off as U.S.-imposed trade restrictions interfered with its ability to procure certain components, according to Reuters.

Reuters said that Oppo, Vivo and Xiaomi have since ramped up production in an attempt to take back market share from Huawei. Apple released its first 5G-enabled smartphones in China last fall.

Meanwhile, China’s Commerce Ministry on Jan. 9 unveiled new rules that prohibit companies from complying with sanctions it deems “unjustified” — regulations that, if enforced, could take the teeth out of some U.S. diplomatic measures.

The introduction to the rules, posted on a Chinese government website in English, states they “are formulated in accordance with the National Security Law of the People’s Republic of China and other relevant laws, for the purpose of counteracting the impact on China caused by unjustified extra-territorial application of foreign legislation and other measures, safeguarding national sovereignty, security and development interests, and protecting the legitimate rights and interests of citizens, legal persons and other organizations of China.”

The order goes on to state that Chinese citizens or companies must report any compliance with foreign government sanctions, and in some cases may be compensated if the cost of doing so is substantial. Failure to report compliance with foreign sanctions could lead to fines or other punishments.

Henry Gao, a law professor at Singapore Management University, told The New York Times: “This basically puts many big companies between a rock and a hard place, because they either have to decide to comply with U.S. sanctions or with the Chinese rules … and either way, they are going to lose one of their biggest markets.”