Apple's iPhone is no longer the best-selling smartphone in China

After five years on top, Apple's iPhone is no longer the best-selling smartphone in China, according to research from Counterpoint's Market Monitor.

Last year, the Cupertino-based technology giant sold 12 million units, capturing just two percent of all smartphones bought by Chinese users.

“Apple with slowing traction for its flagship iPhone 6S during last year saw its negative double-digit growth being somewhat offset by relatively healthy demand for the newer flagship iPhone 7 series in Q4 2016,” the research said.

The flagship model produced by China’s Oppo Electronics reached sales of almost 17 million units. The brand has rapidly won popularity among the Chinese due to its high-spec low-priced devices sold in brick-and-mortar stores.

The report notes that 2016 became a tough year for the iPhone maker in China. Despite smartphone shipments rising six percent over the same period last year, reaching an all-time high, Apple's position is tenuous in the world's second-largest economy.

“Apple still remains in a vulnerable position, and there is higher expectation already with the next year flagship which is rumored to be a substantial upgrade from both design and components perspective,” the research says.

Apple has been fighting for the Chinese market for the last several quarters. Greater China revenue dropped 30 percent in the three months to September 24, 2016, against the same period a year ago.

The company’s market share in China fell from 14.3 percent in 2015 to 10.4 percent last year, according to Counterpoint.

Last year, Apple announced plans to invest $45 million in building a research and development center in Beijing.

On the higher end of the market, iPhones have been squeezed by Huawei in China as well as abroad, while in the mid-tier price range Oppo and Vivo have been aggressively capturing market share.

“While the smartphone user base is at an all-time-high and maturing, still the bulk of the popular models are still skewed toward mid-end which puts a cap on growth for players such as Apple,” said Counterpoint.