Smartphone shipments in China plunged in the first quarter, falling more than the global market, a new report shows, a stat that could worry the world's biggest phone makers including Apple and Huawei.
Vendors shipped 104.9 million units to China in the first quarter of 2016, a five percent year-over-year decline from the 109.8 million recorded in the same period last year, according to research firm Strategy Analytics. The fall outstrips the global smartphone market which fell 3 percent.
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China still remains the world's largest smartphone market and many manufacturers still see the world's second-largest economy as a big growth driver for their business. However, with the market now maturing, conditions are likely to be tougher.
"China smartphone growth is slowing due to market saturation, inventory build and economic headwinds," Linda Sui, director at Strategy Analytics, said in a press release.
The China slowdown has been felt by a number of players, notably Apple, which saw revenue from Greater China – comprising mainland China, Taiwan and Hong Kong – fall 26 percent in its fiscal second quarter.
And Huawei, which is the biggest player in China, has been on a drive to expand outside of its domestic market. The company told CNBC in a recent interview that it plans to surpass Apple as the second-biggest smartphone player in the world in three years and leapfrog Samsung by 2021.
Even start-up Xiaomi, which at one point was growing at an astronomical pace has seen a decline and is looking to markets like India and Brazil to help it continue to grow.
Neil Mawston, executive director of Strategy Analytics, told CNBC that the China market will remain sluggish for the rest of this year, calling it a "mature and heavily penetrated smartphone market."
"The golden era of China smartphone growth is over," he added.
New players emerge
Despite the overall slowdown, Huawei remained resilient with shipments hitting 16.6 million in the first quarter of 2016, a 48 percent rise from the 11.2 million recorded in the same period last year.
Apple had a soft quarter with iPhone shipments slipping to 11.5 million in the first quarter from the 13.5 million during the same quarter in 2015. The U.S. technology giant slipped down the list to become the fifth-biggest player with an 11 percent market share.
Even Xiaomi, which early last year showed rapid growth, saw shipments fall 8.5 percent year-on-year in the first quarter. At one point, Xiaomi was challenging the likes of Apple in China, but new players have quickly begun to emerge.
Chinese firm OPPO saw its shipments jump 67 percent year-on-year and is now the second-biggest player in China with a 12.6 percent market share, hot on the heels of Huawei which is number one with 15.8 percent. And rival Vivo showed shipment growth of 56.2 percent year-on-year, making it the fourth-largest player in China by market share.
Both OPPO and Vivo have managed to make high-quality devices with low prices, an attractive offering for users in China who mainly buy phones out of contract. These companies are posing serious challenges to the likes of Huawei and Apple.
"There are signs that Huawei's growth in the high-end segment is now starting to slow, as several major rivals like OPPO and Vivo are fighting back," Strategy Analytics said.
"Apple posted a soft quarter in China … mixed demand for the iPhone 6s and stronger competition from OPPO and others were among the key factors for its lackluster performance."