Anti-China sentiment waning? Xiaomi reclaims No 1 position, Samsung slips to second spot

KEY HIGHLIGHTS

• Xiaomi recaptures pole position in smartphone segment in Q4 with 26% share ahead of Samsung at 20% 
• For calendar year 2020 also, Xiaomi is ahead with 26% share while Samsung is behind at 21%
• India's smartphone shipments showed strong resilience to decline by only 4% at over 150 million units in a pandemic hit year
• Overall handset sales declined by 9% as feature phone sales declined by a much steeper 20% during the year
• 5G smartphone shipments cross 4 million units in 2020, expected to grow more than 9 times to 38 million units in 2021

In what could be attributed to waning of the anti-China sentiment that had gripped consumers in the middle of last year, Chinese smartphone major Xiaomi has reclaimed its number 1 position in the domestic smartphone market in the last quarter of 2020 with 26 per cent share, ahead of Korean electronics giant Samsung's 20 per cent. 

In the third quarter of 2020, Xiaomi had lost its leadership position in the market with a 3 percentage point fall in market share at 23 per cent which saw Samsung nudge ahead at 24 per cent. That was the first time in 2 years that the South Korean firm had managed to pull one over Xiaomi but the lead lasted for only a quarter.

On the back of strong demand for its phones like the Redmi 9 and Redmi Note 9 series, Xiaomi reported a strong 13 per cent growth year on year during the last quarter. Samsung too registered a strong 30 per cent growth year on year but it managed to increase its market share only by 1 percentage point. That was however, enough for it to wrest the number 2 spot, which it had lost to another Chinese company Vivo in Q4 of 2019.

Xiaomi also stayed ahead of Samsung for the full year 2020 with a 26 per cent share, a 1 percentage point drop over 2019 while Samsung remained static at 21 percent. The next three slots in the top 5 were all occupied by Chinese brands - Vivo (16 per cent), Realme (13 per cent) and Oppo (10 per cent), indicating that despite a wobble in the third quarter when anti-China sentiments were at the peak, the stranglehold of Chinese brands in the Indian smartphone market remains as strong as ever.

"The anti-China sentiments largely subsided by the end of the year with Chinese brands holding 75% market share in 2020. During the year, we saw innovative channel strategies from leading brands due to changed consumer behavior in the wake of COVID-19," said Shilpi Jain, research analyst, Counterpoint Research. "Offline-centric brands such as Samsung, vivo and OPPO increased their online presence. Samsung increased its online presence with the Galaxy M-series on Amazon while launching the Galaxy F-series on Flipkart. Xiaomi launched 'Mi on Wheels' to drive its sales on offline channels and in remote areas. Brands also launched innovative promotions and loyalty programs such as 'Smart Upgrade' to retain as well as increase their user base. At the end of the year, we witnessed the return of Indian brands with Micromax announcing its IN-series smartphones. Indian brands are looking to expand their market share by leveraging the PLI scheme."

Even though 2020 was a pandemic hit year, the smartphone segment showed strong resilience and ended up with only a 4 per cent drop in overall shipment at over 150 million units. High consumer demand post-lockdown, as well as strong promotions on online channels and new uses cases like e-learning and work from home, drove the smartphone market during the year. Feature phones however saw a much sharper 20 per cent decline in sales, which brought the decline for the overall handset market at 9 per cent. The market leader here too was another Chinese brand Itel, which grew 26 per cent year on year.

"The Indian smartphone market maintained its momentum in Q4 2020 after a record-breaking third quarter. As Diwali was in mid-November this year, we witnessed high shipments during October as well. The overall market crossed 150 million units in 2020 driven by high consumer demand post-lockdown," said Senior Research Analyst Prachir Singh. "Multiple new use cases such as online education, as well as increased content consumption, were the major factors for the high consumer demand. Going forward, we believe that this demand will grow further as more people transition from feature phones to smartphones and feature-rich devices, diffusing towards lower price tiers."

The year also saw the re-entry of homegrown brands like Micromax looking to cash in on the anti China sentiment. With its newly launched IN-series smartphones, Micromax has reached its highest market share in six quarters.

"With Indian brands revamping their portfolios, and Jio coming up with an entry-level 4G smartphone, 2021 will be a significant year for Indian brands and we expect their share to increase," Jain said.

Share of 5G smartphones in the premium segment also went up during the year at over 4 million units driven largely by two brands - OnePlus, the only brand with a 100% 5G portfolio, and Apple, which launched the iPhone 12 series with 5G connectivity. This year, 5G smartphone shipments are expected to increase by more than nine times to reach 38 million units.

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