Chinese consumers crave wearable devices
China has emerged as the leading global marketplace for wearable devices in particular for sports. China bought one- third of all wearable devices sold worldwide in 2015, according to CSS Insight, a global analyst and forecaster based in the United Kingdom. CSS predicted that the global market for wearables would reach $14 billion in revenue with sales of 123 million items this year. By 2020, this market will be worth $34 billion. (By comparison, smart phone sales were expected to total 1.5 billion units in 2016, although growth in sales has slowed considerably.) In the global marketplace for wearables, smart watches bring in the more revenue but less expensive activity trackers sell more units. CSS said wrist-worn tracking devices would account for nearly half of all shipments in 2016 while smart watch units would total more than 30 million. In China, wristband activity trackers have become highly popular in the last two years while smart watches are relatively new to the marketplace.
China sales nearly double
Tech savvy, fashion- and health-conscious Chinese aged 18 to 35 are responsible for this boom. They account for 400 million people and benefit from a consistent purchasing power. Fitness and health apps are popular among young people who are truly tech-savvy and have become increasingly focused on fashion and eager to be well groomed. Chinese’s people most favorite fitness applications include Keep, a social workout app; Codoon, a running tracker; and Yuepaoquan, which helps people find and schedule running groups. Also popular are smart devices that track steps or calories burned, including Mi Band, Misfit and Fitbit.
Western companies eye market
While the Chinese company Anhui Huami Information Technology Co. dominates the market in China, western companies like Apple and Fitbit are trying to gain a foothold in the rapidly burgeoning market. Huami is the largest manufacturer of wearables in China and the second largest in the world after Fitbit. The company’s Xiaomi brand has sold more than 20 million Mi Band fitness trackers since it put the devices on the market two years ago. Huami was launched in early 2014 with financing from Xiaomi Corp., one of China’s top smart phone and electronics manufacturers. By August that year, the company had rolled out the wristbands. Huami in late August this year launched its latest device, the Amazfit smart watch. Huami, valued at $800 million, posted total sales of $151 million last year and is expected to boost that number to $225 million this year.
Fitbit loses global share
While Fitbit is the largest manufacturer of wearables globally, it has been losing share to Apple and Huami. Fitbit accounted for 22 percent of sales globally in the third quarter of 2015 compared to nearly 19 percent for Apple and 17 percent for Huami. Apple appears to be making inroads in the Chinese market, selling nearly 400,000 Apple Watches in China between April and June this year. Hoping to boost sales, Fitbit in May announced it was partnering with Alibaba, the giant Chinese online sales platform, in a “China is Getting Fit” initiative that will include sales of Fitbit Blaze and Fitbit Alta products on Alibaba’s Tmail.com. With no end in sight, the government predicts the fitness craze will generate $800 billion by 2025. “Once people have more time and more money, they think of fitness”, said Gu Haoning, an analyst with China’s General Sports Administration. “It would be impossible if they were still trying to eke out a living and don’t have extra money”.