Apple Inc's iPhone last year lost the title of the best-selling smartphone in China for the first time in four years, highlighting the mounting challenges it faces from local smartphone vendors, a new report said.

The decline is in line with the US tech firm's latest financial report that its sales in China dropped 12 percent in the quarter ending December.

According to Counterpoint Technology Market Research, Oppo Electronics Corp's middle-end R9 handset was China's most popular model in 2016, with an annual shipment of 17 million units and a market share of 4 percent.

Apple's flagship model, the iPhone 6s, ranked second with a market share of 2 percent. This is the first time Apple lost the title since 2012.

Huawei Technologies Co Ltd, which aims to outcompete Apple in the premium segment, secured the third spot with its affordable Honor Joy 5S model.

"Oppo's omnipresent distribution channels from big to small cities across China and its aggressive marketing strategy are giving its products an edge," said Tarun Pathak, associate director at Counterpoint.

The result came as Apple said on Wednesday it shipped 78.3 million iPhones in the final quarter of 2016, hitting an all-time high, thanks to the popularity of its iPhone 7 series.

But amid the intensified competition in China, Apple failed to stop the bleeding in the world's largest smartphone arena. China remained the weakest market for Apple in the latest quarter, with sales down 12 percent from the same quarter last year to $16.2 billion.

Apple said part of the decline was due to the continued weakness in China's currency. And it added that it was narrower than the almost 30 percent decline in the previous quarter.

"I'm encouraged with the significant improvement," said Apple CEO Tim Cook.

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