China’s smartphone market contracts for first time in six years by Andrew Nusca @FortuneMagazine May 11, 2015, 9:15 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The market for smartphones in China contracted 4% between last year and this year, a sign that its tremendous and sustained growth is finally starting to slow down. Phone makers shipped 98.8 million units to Chinese consumers in the first quarter of 2015, according to market research firm IDC. It’s the first time in six years that the country’s market experienced a drop on a year over year basis. Quarter over quarter, the market contracted 8%—the result of a large inventory buildup at the end of last year. It was mere months ago that Fortune published a vivid feature story on the Chinese phone market. In it, writer Scott Cendrowski outlined how China’s largest phone makers were increasingly looking further afield as their home market matured. IDC’s figures prove that out. The Chinese market is now so saturated that it’s beginning to resemble the United States, United Kingdom, or Japan, where most effort is focused on convincing existing customers to upgrade to a newer smartphone, rather than exchange a feature phone. According to IDC, Apple was the top smartphone vendor in China in the first quarter of 2015, thanks to its iPhone 6 and iPhone 6 Plus. Xiaomi, the well-funded Chinese startup (and No. 1 company on Fortune‘s Unicorn List), slipped to second position—the product of stiff competition in the low- and mid-range segment of the market. Huawei, another Chinese vendor, rounded out the top three. Neither Samsung or Lenovo made a showing in the top trio, a sign of how volatile China’s market remains for vendors. The market research firm expects “relatively flat growth” for China in 2015, stronger competition in the high-end segment, and—as Cendrowski suggested—further expansion into India and other neighboring countries in Southeast Asia.