Research Shows Samsung, Apple Losing to Huawei in China Due to High Price Tags

Market data released by the tech research team Gartner shows Huawei's share of the smartphone market climbing to almost 15 percent in the three months ended December 2018, while both Samsung and Apple are losing their share of the Chinese market, scaring off consumers with high smartphone prices.

Both Samsung and Apple still rank first and second in terms of market share, covering approximately 17 and 16 percent of the industry, respectively. Yet this is the first time the Chinese tech giant has come close to matching their share of the sector, as both competitors lost ground in the fourth quarter year-over-year, according to the figures.

"Apple has really been losing ground on a couple of things, especially when it comes to emerging markets like Greater China," Anshul Gupta, senior research director at Gartner, told CNBC in an interview. "What we are seeing in China is that the leading Chinese players have raised the quality of their smartphones significantly."

Apple sold 64.5 million iPhone units in the fourth quarter of 2018, Gartner estimated —  down almost 12 percent from the same period in the previous year. iPhone revenue had fallen 15 percent in the first quarter year-over-year, and this latest decline has been attributed to Apple’s poor performance in China. Apple CEO Tim Cook, however, claimed that the decline was the result of customers "holding on to their iPhones a bit longer than in the past" and "macroeconomic factors particularly in emerging markets."

READ MORE: Apple Cuts Sales Outlook over National Boycott in China

Gupta, on the other hand, believes that price is a key factor, noting that customers are able to find the same features as Apple or Samsung in Chinese brands.

“When you look at the flagship smartphones from Huawei, or from Oppo and Vivo, they have features that one can find in the flagship smartphones of Samsung and Apple, but at the same time the prices are quite low,” he said, noting that Apple's iPhone and Samsung's Galaxy are seen to get only "incremental and marginal improvements" during each upgrade, making consumers turn to cheaper devices.

Gupta also indicated that people are increasingly showing the same level of "pride" with owning a Chinese model as they would with an Apple or Samsung device, as domestic companies “increase their brand visibility in international markets.”

Huawei has been experiencing problems recently, which, however, are rather political then economic or technical. The company has been accused by US officials of being connected with the Chinese government and Huawei's Chief Financial Officer Meng Wanzhou — the daughter of Huawei founder Ren Zhengfei — is accused of committing bank and wire fraud to violate sanctions on Iran and was arrested in Canada last year. The company has denied Washington's claims and Ren described the arrest of his daughter as being "politically motivated."

Gupta noted that the negative US press has had little impact on the company’s global phone sales, as the governments that are casting doubt on the company's practices are more concerned with the firm's telecoms gear in their 5G rollouts than in its smartphone business. Also, Gupta says Huawei “doesn’t have much business coming from the US, especially when it comes to devices,” so the effect on the market remains negligible.