The iPhone 6s sold 12 million units in 2016 or around 2 percent of all phones sold in China, behind the Oppo R9 – the flagship smartphone of the Chinese brand Oppo Electronics – which sold close to 17 million units, capturing 4 percent market share, according to Counterpoint Research.
Oppo is one of the fastest-growing smartphone brands in China which has made its name through high-spec low-priced devices, being sold through bricks and mortar stores.
Counterpoint noted that China's smartphone shipments reached an all-time high in 2016, growing 6 percent year-on-year to 465 million units, but it noted that Apple still remains "vulnerable" in China.
"Apple with slowing traction for its flagship iPhone 6S during last year saw its double-digit negative growth being somewhat offset by relatively healthy demand for the newer flagship iPhone 7 series in Q4 2016," the research said.
"However, Apple still remains in a vulnerable position and there is higher expectation already with the next year flagship which is rumored to be substantial upgrade from both design and components perspective."
The Cupertino, CA-based company has been struggling in China for the last few quarters. In the three months to 24 September 2016, Greater China revenue fell 30 percent year-on-year. Apple has been on a charm offensive, visiting China last year, and announced a US$ 45 million research and development center in Beijing. Its market share has fallen from 14.3 percent in 2015, to 10.4 percent last year in China, Counterpoint said.
Apple has been squeezed on the higher end of the market by Huawei which has been making a huge push with its smartphones, not just in China, but abroad too. In the mid-tier price range, Oppo and Vivo have released high-quality but lower priced devices and are aggressively taking market share.
Oppo's shipments grew 109 percent year-on-year in China, while Vivo saw a 78 percent rise. Huawei was up 21 percent, but Apple was down 21 percent, according to Counterpoint. Even Xiaomi, once the darling of the Chinese smartphone world, saw a 22 percent year-on-year decline in shipments in 2016.
"While the smartphone user base is at an all-time-high and maturing, still bulk of the popular models are still skewed towards mid-end which outs a cap on growth for players such as Apple," Counterpoint noted, highlighting one of the biggest challenges for the U.S. company in China.
But Apple is slated to be releasing a special tenth anniversary edition of the iPhone 8 this year, with leaks and rumors suggesting a major overhaul in design. One report said Apple could be using OLED screens rather than LCD screens, while the display would take up more of the front of the phone. Analysts said the next iPhone will be the key to unlocking growth in China.
"The key features which are driving smartphone market have been fast-charging, OLED displays, bigger batteries and dual cameras which were already available. But most were missing in the iPhone 6s. The iPhone 7 Plus has a bigger battery and dual camera but it was beyond the reach of most consumer in China because of price," Neil Shah, research director at Counterpoint, told CNBC by phone.
"In the iPhone 8, the OLED screen which is rumored will be a positive. I think the next model will be key for Apple."