China’s third-party mobile payment grew by 11.52% to 43.8 trillion yuan (US$6.39T) in Q3 2018. Alipay (53.71%) and Tencent Finance (38.82%) combined accounted for 92.53%, leaving a small space for other players.

In Q3 2018, the third-party mobile payment grew to be a roughly 43.8 trillion yuan market in China. It bounced back to double-digit growth (11.52%) quarter-on-quarter after a permanent downturn that was partly influenced by the official crackdown on internet finance risks.

The multiple usage scenarios including e-commerce, food & beverage, air flights, and transportation, etc. help this market keep its growing pace, quick or slow.

Alipay continued to lead this market with a share of 53.71% in terms of transactions values. Great efforts have been made to acquire new users and get old users further engaged mainly by means of red envelope campaigns.

Tencent Finance followed behind with a share of 38.82%, expanding its user base in financial and offline transactions. That was profited from Tencent Finance-backed LiCaiTong that added pension funds to its fund offering and its aggregated customer assets surpassing 500 billion yuan at the end of Q3. Alipay and Tencent Finance combined accounted for 92.53% of this market, leaving a small space for other players.

Click here for detailed China mobile payment usage insights in Q3 2018

Monthly active users of Momo reached 110.5 million in September 2018, compared with 94.4 million the prior year period, according to its unaudited financial results. Total paying users of Momo’s live video service and value-added services, including 3.6 million paying users of Tantan, were 12.5 million for Q3 2018, an increase of 71.23% year-on-year.  

Total net revenues were $536.0 million in Q3 2018, an increase of 51% year-on-year.

• Live video service revenues were $406.9 million, an increase of 34% year-on-year.
• Value-added service revenues were $84.2 million, an increase of 221% year-on-year. That was mainly from membership subscription revenues and virtual gift revenues.
• Mobile marketing revenues were $17.2 million, a decrease of 1% year-on-year.
• Mobile games revenues were $4.1 million, a decrease of 49% year-on-year.

Net income attributable to Momo was $85.2 million in Q3 2018, compared with $79.1 million the prior year period.

Weibo MAU increased to 446M in Q3 2018, 93% mobile

Continue to read: Top social networking mobile apps in China

43 million Chinese traveled overseas in Q3 2018 according to COTRI, an increase of 10% year-on-year. A slow decline compared with the growth of 17% in Q1 and 16% in Q2.

Specifically, 20 million person-trips went to Hong Kong, Macau, and Taiwan. And, the rest 23 million person-trips went to the rest of the world. COTRI estimates China’s outbound tourism will see over 160 million person-trips in 2018.

Chinese travelers went on 40 thousand person-trips to Nepal in Q3 2018, an increase of 77% year-on-year. That totaled 110 thousand person-trips for the first three quarters of 2018. The whole figure would break the record of 123 thousand person-trips in 2014.

Chinese spent US$258 billion in outbound travel

Weibo reported a net addition of approximately 70 million in MAUs year-on-year to reach 446 million in September 2018. Mobile MAUs represented 93% of total MAUs. DAUs had a net addition of approximately 30 million users year-on-year and reached 195 million.

Net revenue totaled US$460.2 million in Q3 2018, an increase of 44% year-on-year.

• Advertising and marketing revenues were US$409.3 million, an increase of 48% year-on-year. US$380.7 of that were from small & medium-sized enterprises and key accounts.
• Value-added service revenues were US$50.9 million, an increase of 18% year-on-year.

Net income attributable to Weibo was US$165.3 million, an increase of 63% year-on-year, and diluted net income per share was $0.73, compared to $0.45 for the prior year period.

Non-GAAP net income attributable to Weibo was US$171.8 million, an increase of 49% year-on-year. Non-GAAP diluted net income per share was $0.75, compared to $0.51 for the prior year period.

Adjusted EBITDA was US$192.8 million, an increase of 42% year-on-year, or 42% of net revenues, compared to 42% for the prior year period.

Continue to read China’s social media landscape here.

Pinduoduo announced increased GMV by 386% year-on-year to 344.8 billion yuan (US$50.2 bn). Its active buyers rose by 144% year-on-year to 385.5 million in the last twelve months ended September 2018.

Average monthly active users totaled 231.7 million in Q3 2018, an increase of 226% year-on-year. Annual spending per active buyer was 894.4 yuan (US$130.2), increased by 99% from the prior year period.

Pinduoduo’s total revenues reached 3,372.4 million yuan (US$491.0 mn), an increase of 697% year-over-year and 24% quarter-on-quarter. However, it has been accused by a US investment firm of overstating its revenues and understating its losses and staffing costs.

• Revenues from online marketing services were 2,974.1 million yuan (US$433.0 mn), an increase of 927% year-on-year and 25% quarter-on-quarter.
• Revenues from commission fees were 398.3 million yuan (US$58.0 mn), an increase of 198% year-on-year and 18% quarter-on-quarter.

Total costs of revenues were 774.7 million yuan (US$112.8 mn), an increase of 315% year-on-year and 100% quarter-on-quarter. The increase from last quarter was mainly due to higher costs for cloud services, our call center and merchant support.

Total operating expenses were 3,867.2 million yuan (US$563.1 mn), compared with 470.6 million yuan in Q3 2017.

• Sales and marketing expenses were 3,229.6 million yuan (US$470.2 mn), an increase of 655% year-on-year, mainly due to an increase in branding campaigns and online and offline advertisement and promotions.
• General and administrative expenses were 305.6 million yuan (US$44.5 mn), a significant increase from 7.0 million yuan in Q3 2017, primarily due to an increase in headcount and share-based compensation expenses.
• Research and development expenses were 332.0 million yuan (US$48.3 mn), an increase of 828% year-on-year.

Operating loss was 1,269.5 million yuan (US$184.8 mn), more than 5 times as much compared with operating loss of 234.4 million yuan in Q3 2017. Non-GAAP operating loss was 790.0 million yuan (US$115.0 mn), compared with 230.9 million yuan in Q3 2017.

Basic and diluted net loss per ADS was 1.20 yuan (US$0.16), compared with 0.52 yuan in the prior year period. Non-GAAP basic and diluted net loss per ADS was 0.68 yuan (US$0.08), compared with 0.48 yuan in the prior year period.

Net cash provided by operating activities was 249.7 million yuan (US$36.4 mn), compared with net cash used in operating activities of 682.1 million yuan in the prior year period, primarily due to an increase in online marketing services revenue.

Cash and cash equivalents were 15.0 billion yuan (US$2.2 bn) as of September 30, 2018, compared with 3.1 billion yuan as of December 31, 2017.

This British brand shut down their Tmall flagship stores

The three leading smartphone brands – Huawei (excluding Honor), Xiaomi, and iPhone – kept winning more shares in urban China market as all grew their shares over a year ago, according to the Q3 data from Kantar Worldpanel ComTech. Xiaomi Mi 8 was the most popular handset model in Q3 2018. The next three models on the best-seller ranking were all from iPhone, including the runner-up iPhone X.

As more brands followed iPhone’s suit to launch premium products, the average selling price of smartphones in Q3 increased across the industry. The proportion of sales from premium models increased by 7 percentage points from a year ago.

Huawei continued to win consumers from other brands. Huawei ranked No.1 in terms of net new consumers won (=total new consumers won – total new consumers lost) in Q3, followed by iPhone.

Among all the users leaving Huawei and Honor, the proportion of people joining iPhone camp decreased from a year ago. While the proportions of OPPO/VIVO-turned-iPhone user increased.

There is a lot in common in ex-OPPO/VIVO users, such as they’re relatively young, most of them live in tier-1 and -2 cities, not happy with chips and speed, pay attention to other people’s recommendations, etc.

It’s more important, and to some extent easier, for smartphone brands to keep existing consumers compared to win over consumers. They need to invest more in raising loyalty, according to Liang Yaguang, Consumer Insight Director of Kantar Worldpanel ComTech China.

The average Net Promoter Score (NPS) among Chinese consumers dropped in Q3. Huawei (excluding Honor), VIVO, and OPPO are above the average among mainstream iPhone. The NPS for Samsung eclipsed that of Xiaomi for the first time.

As major brands keep expanding their user bases, the user profiles began to look more like each other. OPPO and VIVO both had more male users while Huawei (excluding Honor) and Xiaomi had obtained more female consumers.

In the United States, Android lost ground to iOS in Q3. Early sales of iPhone XS and iPhone XS Max models in the United States are good news for Apple.

Combined with the continued strong momentum among iPhone 8 and 8 Plus, these sales have contributed to a 5.0 percentage point increase in OS share for Apple in the US – the biggest gain seen worldwide in Q3 2018.

iPhone 8 was the top-selling model in the US over the quarter, with a 9.4% share of the handset market, according to Dominic Sunnebo, Global Director for Kantar Worldpanel ComTech.

But in the five main European markets (UK, France, Germany, Spain, and Italy), Android made significant gains against iOS. The Samsung Galaxy S9 was the top-selling model across the big five markets in September. Meanwhile, the newly released Galaxy Note 9 has made it into the top 10 most popular models for the month. Both Huawei (P20 Lite) and Xiaomi (Mi Note 5) made it to the top five handset ranking for the first time.

European consumers are holding on to their handsets more than two months longer than they were in 2016. Huawei has consolidated its position as the second best-selling brand in Europe behind Samsung from the launch of its P20 series.

Xiaomi continued to expand rapidly in Spain and, more recently, in Italy and France. The focused push that Huawei and Xiaomi are making into Europe is causing pain for their rivals across the board. However, it is Sony, LG, and Wiko who are being disproportionally impacted as a result of their historic over-reliance on the ultra-competitive low and mid-price tiers.

In Japan, Apple continued to lead handset sales under the pressure from Sharp and Huawei, both of which has increased shares of sales by 6 percentage points and 3.2 percentage points, respectively. Sharp’s flagship Aquos R2 and Huawei’s P20 Lite were among the top five best-sellers for the third quarter.

This post was originally published on Kantar.com.

Xiaomi shipped 33.3 million units smartphones in Q3 2018, a 20,4% growth year-on-year. That recorded approximately US$5.04 billion in revenue, an increase of 36.1% year-on-year. Xiaomi Mi 8 ranked 1st in terms of sales volume on Singles’ Day shopping festival 2018. Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018. The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018.

Xiaomi generated 50.8 billion yuan (US$7.31 bn) in revenue in Q3 2018, an increase of 49.1% year-on-year.

Revenue from international markets accounted for 43.9% of the total. Adjusted profit grew by 17.3% year-on-year to 2.9 billion yuan (US$417.58 mn). The IoT and lifestyle products segment experienced the fastest growth.

Xiaomi Smartphones

Xiaomi shipped over 100 million units smartphones for 2018 on October 26, 2018. Xiaomi smartphones recorded approximately 35.0 billion yuan (US$5.04 bn) in revenue for Q3 2018, an increase of 36.1% year-on-year. Smartphone sales volume reached 33.3 million units in Q3 2018, up 20.4% year-on-year.

Shipment of Xiaomi flagship Mi 8 series had reached 6 million units by October 9, 2018. During the Singles’ Day shopping festival in 2018, Xiaomi Mi 8 ranked 1st in terms of sales volume in the 2,000 yuan to 3,000 yuan price range in the smartphone category on Tmall.com and JD.com, as well as in the 2,000 yuan to 2,499 yuan price range in the smartphone category on Suning.com.

Xiaomi smartphone average selling price (ASP) in mainland China was 16% higher over Q3 2017 and was 4% higher over Q2 2018. The smartphone ASP outside mainland China also increased by 18%, which can be attributed to the increase in the proportion of shipments in Western Europe. The percentage of revenue from smartphones over 2,000 yuan accounted for 31% of total smartphones revenue in Q3 2018.

Xiaomi IoT and lifestyle products

Revenue of the IoT and lifestyle products segment increased by 89.8% year-on-year to 10.8 billion yuan in Q3 2018. This revenue increase was primarily due to a rapid growth in the sales of smart TVs. Besides that, laptops and several Xiaomi ecosystem products such as Mi Band and Mi Electric Scooter also experienced robust sales growth.

The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018. The global sales volume of Xiaomi smart TVs reached 5.2 million units in the first nine months of 2018. Xiaomi smart TVs monthly sales volume exceeded 1 million for the first time in October 2018.

During the Singles’ Day shopping festival in 2018, the sales volume and sales value of Xiaomi smart TVs both ranked 1st among all the TV brands on Tmall.com, JD.com, and Suning.com, respectively. Xiaomi launched its smart TVs in the India market in February 2018, which is now the leading smart TV brand in India, according to IDC Consulting (Beijing) Ltd. (“IDC”).

Xiaomi launched Mi Air Conditioner on July 23, 2018, which received positive reviews from users. There were about 1.98 million users who own more than five Xiaomi IoT devices as of September 2018, excluding smartphones and laptops, representing a quarter-on-quarter rise of 16.5%.

Internet services

Revenue from Xiaomi internet services segment grew 85.5% year-on-year to 4.7 billion yuan in Q3 2018. Advertising revenue grew by 109.8% year-on-year to 3.2 billion yuan. Revenue from internet value-added services also grew 49.7% year-on-year to 1.5 billion yuan, of which 652.5 million yuan were from gaming, a 12.0% year-on-year increase.

Revenue from other internet value-added services grew by 98.6% year-on-year to 892.7 million yuan, primarily due to an increase in revenue contribution from the internet finance business and Youpin e-commerce platform.

Monthly active users (“MAU”) of MIUI increased 43.4% from 156.5 million in September 2017 to 224.4 million in September 2018. The average revenue per MIUI user (“ARPU”) for the quarter under review increased by 29.4% year-on-year to 21.1 yuan.

Overseas internet services revenue accounted for 4.4% of Xiaomi’s total internet services revenue in Q3 2018. The MAU of Xiaomi Mi TV and Mi Box reached 15.9 million in September 2018. Xiaomi also saw a more significant contribution to internet services revenue from non-smartphone devices.

For example, TV internet services revenue accounted for 5.4% of its total internet services revenue in Q3 2018.

International markets

Xiaomi mainland China revenue grew 20.9% year-on-year to 28.5 billion yuan while international markets revenue grew 112.7% year-on-year to 22.3 billion yuan in Q3 2018. Revenue from international markets accounted for 43.9% of the total in Q3 2018.

Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018, according to Canalys.

Xiaomi smartphone shipments for India grew 31% year-on-year in Q3 2018 and achieved the number one market share position in terms of shipments for four consecutive quarters, according to Canalys. Furthermore, Xiaomi recorded orders of more than 6 million smartphones and orders of more than US$1 billion for all of its products for the Diwali Festival in India this year, during the period from October 9, 2018 to November 8, 2018.

In Indonesia, Xiaomi ranked second in terms of smartphone shipments with year-on-year growth of 337%. It also ranked top five in the smartphone markets of 30 countries and regions in terms of shipments in Q3 2018, according to Canalys.

Related: 71 brands pre-sale exceeded 100 million yuan (US$14M) during Double 11

Other business highlights

AI+IOT

Artificial intelligence (“AI”) + IoT forms one of Xiaomi’s core strategies. Xiaomi AI assistant (“小愛同學”) had more than 34 million MAU, making it one of the most used AI voice interactive platforms in mainland China as of September 2018.

At the World Internet Conference in November 2018, Xiaomi’s AI Open Platform for Smart Homes won the “World Leading Internet Scientific and Technological Achievements” award. At the 2018 China Big Data Industry Ecology Conference, Xiaomi was selected as one of the “Top 50 Chinese Big Data Enterprises”.

At the third AI WORLD 2018 World Artificial Intelligence Summit, Xiaomi was selected as one of the “TOP 10 AI Leading Enterprises in China”. At the 2018 World Artificial Intelligence Conference, Xiaomi AI assistant (“ 小愛同學 ”) was shortlisted for the SAIL Award, the conference’s most prestigious award.

During the third quarter of 2018, Xiaomi announced that Mobile AI Bench, its end-to-end benchmark tool for hardware and neural network frameworks testing on mobile devices, would become a fully open source platform. Empowered by AI, Xiaomi’s IoT platform continues to grow and maintain a leading position in the industry.

The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 132 million units as of the end of Q3 2018, an increase of 13.8% from the previous quarter.

Efficiency

Xiaomi had 499 Mi Homes in mainland China as of September 30, 2018, mainly in first- and second-tier cities. Moreover, to further penetrate lower-tier cities and rural areas of China, Xiaomi had more than 1,100 authorized stores in total by the end of Q3 2018, compared with more than 360 authorized stores in Q2 2018.

Despite the rapid expansion of its offline channels, Xiaomi’s overall operation remained highly efficient with the operating expense ratio at 8.5% for Q3  2018.

Brand Strategy

Xiaomi launched POCO, a new smartphone brand. The POCO smartphone, first released in India on August 22, 2018, is now available in most of Xiao’s international markets and is widely popular among tech enthusiasts.

It also launched a gaming smartphone brand, Black Shark, through one of its investee companies. Black Shark brings together powerful hardware, cutting-edge innovation, refined build and design, polished software, and gamer-centric services to deliver the ultimate gaming experience to users.

On November 19, 2018, Xiaomi and Meitu, Inc. (“Meitu”) entered into a strategic cooperation agreement in relation to, among others, the exclusive global license of the Meitu brand and global license of certain technologies and domain names in relation to all future Meitu branded smartphones under the cooperation and certain smart hardware products.

Through this strategic partnership, Meitu’s image-related algorithms and technologies can help Xiaomi to provide better photographic experiences to its users. At the same time, the strength of Meitu’s brand among females can also help Xiaomi continue to expand and diversify its user base.

Insights of China internet users in lower-tier cities

Total revenues of iQiyi grew to RMB6.9 billion (US$1.0 billion) in Q3 2018, representing a 48% increase from the same period in 2017. Membership services revenue was RMB2.9 billion (US$415.3 million), representing a 78% increase from Q3 2017. Online advertising services revenue was RMB2.4 billion (US$348.9 million), down 4% YoY.

China’s online video market remains dominated by iQiyi, Tencent Video, and Youku. Check out the top mobile video apps in China here.

Net loss attributable to iQIYI was RMB3.1 billion (US$457.3 million), compared to RMB1.1 billion in the same period in 2017. Diluted net loss attributable to iQIYI per ADS was RMB4.34 (US$0.63).

The number of its total subscribing members was 80.7 million as of September 30, 2018, over 98% of whom were paying subscribing members. This compares to 42.7 million of total subscribing members as of September 30, 2017, up 89% year over year.

iQiyi’s record-breaking drama series Story of Yanxi Palace turned out to be a mega-hit for the entire summer, demonstrating its potentials in producing high-quality premium content. Leveraging our extensive content offerings and expanding distribution network.

iQiyi ranked No. 1 across reach and engagement operating metrics in Q3 2018 according to its press release.

The QIYU VR II headset from iQiyi reached the top ranking on both JD.com and TMall in the ‘Over 2,000 RMB mid-to-high-end VR all-in-one’ headset category. The QIYU VR II won the 2018 METIS Award for Virtual Reality/Augmented Reality Innovation, a.k.a. the AM Turing Award.

Also read: Paid content is becoming a mainstream in China