HONG KONG: Despite strong iPhone sales, Apple is struggling to achieve growth in the key Chinese market.

According to market research firm Canalys, Apple topped the league in Hong Kong sales for the first quarter, with a 46% share of the smart phones market, but this was down from 54% in the last quarter of 2012.

Reuters reports that while Apple sold an impressive 31.2m iPhones in its third quarter, a fifth more than analysts had predicted, total sales in greater China fell by 43% from the previous quarter and are 14% down on the year.

The decline is especially worrying for the US phone giant, as China has low levels of penetration, and should be a key engine of growth for the company.

However, Apple CEO Tim Cook remains bullish on the outlook, insisting that slowing economic growth in China is the main reason for the poor performance.

Analysts expect Apple's market share to continue declining by 1-2% over the coming quarters, as the novelty of the iPhone 5 fades and consumers switch to cheaper alternatives.

"China is a very diverse market so you need to have very diverse products to serve different levels of customers, and that's the weakness for Apple," said Nicole Peng Luping, of Canalys.

Meanwhile, Daniel Ernst of Hudson Square Research, said: "It's going to take a new product introduction before we see earnings turn positive."

And, as the battle between Apple and Samsung continues, LG Electronics of South Korea is also gaining ground, reporting a doubling of its smart phone sales in the April-June quarter, to some 12.1m units.

Data sourced from Reuters; additional content from Warc staff