China's overall mobile phone shipments reached 109.8 million units, a fall of 5.6 percent compared to the previous year, according to the report.

"The key reason for the slowdown is the market saturation. How to attract more consumers is the top priority for future development," said Kitty Fok, director of IDC China.

Statistics from IDC showed that domestic smartphone market saw intense competition in the past five quarters, as the top position witnessed frequent changes with Samsung, Lenovo, Xiaomi, Apple all occupying the spot alternatively. "Some brands experienced major slump in sales this quarter," said Wang Jiping, chief research officer of IDC China.

"Another reason for the decline in overall sales is that customer loyalty isn't what it used to be, and that is why we are seeing so many brands," Wang added.

According to Wang, to compete with Apple's iPhone 6 and iPhone 6 Plus, domestic makers are keen on improving their innovation abilities to stimulate consumption. In order to reduce the cost of distribution, some of them have developed new selling methods, such as online sales, physical stores, business to business to consumers (B2B2C), and even crowdfunding.

Tay Xiaohan, Senior Market Analyst with IDC's Asia/Pacific Client Devices Group, told chinadaily.com.cn, that due to the market slowdown in the Chinese mainland, domestic manufactures have accelerated their plans to expand into India and Southeast Asia.

"The golden rule of success is how to depute channels of distribution and build localized marketing strategies," said Tay.

Smartphones that are priced lower than $150 will see more growth, said Tay. The market potential will be realized as more local phone users switch to low-end smartphones.