Canalys: The annual shipment volume of the mainland Chinese smartphone market is expected to exceed 290 million units in 2025.

On January 10th, Canalys mentioned in an article that subsidy programs will drive growth in annual smartphone shipments by 2025. Canalys slightly raised its forecast for smartphone shipments in mainland China in 2025, with an estimated annual shipment volume of over 290 million units, representing a 3% to 5% increase compared to 2024. In August 2024, the Chinese government implemented subsidy policies aimed at stimulating consumption and boosting domestic demand for eight categories of products including computers, televisions, and air conditioners. Initially, smartphones were not included in the national subsidy plan. However, in the following months, various regions such as Shenzhen, Jiangsu, and Guizhou introduced subsidy measures providing 10% to 20% subsidies for 3C electronic products including smartphones. From September to November, the total retail sales of consumer goods in China increased by 3.3%, 5.0%, and 4.0% respectively year-on-year. On January 8th, 2025, the Chinese government expanded the scope and coverage of the subsidy plan. Now, the national subsidies cover smartphones, tablets, smart wristbands, and smartwatches, providing a 15% subsidy for products priced below 6000 yuan (approximately 818 US dollars), with a maximum subsidy of 500 yuan per product. However, high-end models are not included in the subsidy range, which affects flagship models and foldable smartphones from some local manufacturers as well as Apple's Pro models. Products in the price range of 3000 to 4000 yuan are more likely to maximize the benefits of the subsidy. In the coming months, local governments may also introduce a series of local measures in response to the national policy based on their financial capabilities. From a consumer perspective, the expanded subsidy plan in 2025 will directly stimulate consumption, enhance consumer confidence, and boost demand, especially against the backdrop of China's economic recovery. However, compared to home appliances, the price requirements and subsidy limits for smartphones are more stringent. Home appliances do not have price restrictions, with a maximum subsidy of up to 2000 yuan per item. The subsidy policy did not meet the expectations of consumers at the end of last year, and its stimulating effect will be somewhat limited. While the subsidy policy drives demand for device upgrades, it also brings new opportunities and challenges for manufacturers and channel partners, including government cooperation, financial management, pricing strategies, and channel resource allocation. The subsidy policy will be more favorable for local manufacturers such as Xiaomi, Honor, Huawei, Vivo, and OPPO, which cover a wider range of products from entry-level to mid-to-high-end. However, high-end brands like Apple will face more severe challenges. To maintain price competitiveness, they need to evaluate resource investments and promotional efforts. Canalys has identified the following key opportunities and challenges: Opportunities Consumers choose higher-priced products: Consumers in the upgrade cycle may adjust their budget and purchase more expensive devices due to subsidy incentives. Synergies of ecosystem combinations: Subsidies cover PCs, tablets, smartphones, smart wristbands, smartwatches, and even electric cars, providing hardware manufacturers with diverse product portfolios the opportunity to promote bundled purchases and attract ecosystem consumers. Price advantages of physical stores: Offline channels benefit from local government subsidies, providing them with a competitive price advantage over online channels. Advantages of organized large channels: Organized large channels have strong financial resources and operations that comply with government requirements. Compared to small channels, they may gain a competitive edge and price advantage. Increased foot traffic will drive sales of other products: Government promotion and publicity of the subsidy plan will attract more consumers to physical stores and online platforms, increasing the exposure and sales of other products. Challenges Consumer indecision suppresses short-term demand: Different policies in different cities and channels lead to delays in purchasing as consumers wait for subsidies to take effect and compare prices. Device price limit set at 6000 yuan: The price cap of 6000 yuan excludes high-end models and brands. This will complicate product roadmap and pricing strategies for manufacturers in 2025 as they strive to maximize subsidies while ensuring product coherence. Cooling demand after policy implementation: While consumption accelerates growth thanks to subsidies, this growth is not organic. Once the subsidies end, a cooling period of demand is inevitable. Reduction in early cash inflow: Manufacturers and channels face a reduction in early cash inflows as subsidies need to be applied for through government processes after product sales. Disadvantages of unorganized small channels: Small channels with limited financial resources and operations may struggle to compete with organized channels. Complexity in price and inventory management: Manufacturers and channels must more carefully manage pricing and inventory to ensure supply continuity, balance price differences between channels, and optimize inventory allocation. Although the subsidy plan in 2025 will drive growth in annual smartphone shipments, several limiting factors must not be overlooked. Sales growth originates from early consumption and a shortened device upgrade cycle, rather than organic growth. The sales growth in cities where local subsidy plans were implemented in 2024 has limited reference value as these cities are primarily concentrated in first and second-tier cities. Additionally, regional policy differences mean that sales growth includes contributions from surrounding regions; products eligible for subsidies must meet the requirement of being priced below 6000 yuan; the wide range of products covered by the subsidy policy, from home appliances to cars and consumer electronics, may affect consumers' decisions and budgets when purchasing smartphones. Based on these assumptions, Canalys slightly raised its forecast for smartphone shipments in mainland China in 2025, with an estimated annual shipment volume of over 290 million units, representing a 3% to 5% increase compared to 2024.