Many consumers in China are choosing cheaper home grown smartphones over an iPhone, when they upgrade from feature phones, which is why Apple's share of China's smartphone market was halved in the second quarter.
According to China Daily, these phones are more geared to local needs and Apple is in talks with Chinese carriers to come up with a cheaper model of iPhone.
A consumer said that the quality of a local phone is not bad despite the cheap price and web streaming is quite fast.
By 2015, four out of every five cell phones sold will be smartphones in China, almost double the number right now, the report said.
Gartner forecasts the technology market in rural China will be worth 135 billion dollars by 2022, similar size to the urban market today, the report added.
