China's mobile phone shipments expected to rise 10pc as subsidy scheme takes effect

China's mobile phone shipments are expected to increase by 10 percent year-on-year to surpass 80 million units during the first quarter of this year due to a new subsidy policy, according to research firm Counterpoint.

The initiative has intensified competition in the short term, but it has not significantly altered the market share among leading brands. 

Once the 15 percent purchasing subsidy for consumers concludes, market growth will be driven by traditional promotional strategies and innovative products.

The policy will accelerate the replacement cycle for consumers, particularly for mid-to-high-end models priced between 3,000 yuan (HK$3,185) and 5,000 yuan.

Smartphone makers may resort to cutting prices or ramping up promotions, which could temporarily stimulate consumption. 

However, the heightened competition may lead to diminished market demand once the subsidy is lifted. 

While this initiative will help in clearing inventory and allow for new products, the overall annual shipment volume is projected to only see about a 3 percent increase to 284 million units.

LAINEY LIU