CELLPHONES: Xiaomi’s China Crown, Huawei Charges Honor
Bottom line: Xiaomi’s sales growth will slow this year as it faces stronger competition outside China, while recent momentum by Huawei could position it as the country’s solid number-two manufacturer.
I previously gave Xiaomi my award for China’s top tech company of 2014, and now the smartphone superstar has cemented that title by formally unseating global giant Samsung (Seoul: 005930) as last year’s leading Chinese brand. In a separate smartphone news bit, the stodgier and older Huawei has changed the chief for its Honor brand, in one of a series of recent developments that could position the company to become China’s second best-selling manufacturer this year.
As a regular writer about the China smartphone market, I’ve watched the many twists and turns in the rapid development of both Xioami and Huawei, which have emerged as my 2 major players to watch this year. Rivals Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) are also names to keep an eye on; but if I had to bet money, I would say Xiaomi and Huawei are likely to end 2015 as China’s 2 largest smartphone makers by a comfortable margin.
All that said, the story in the year ahead could be quite different for these 2 smartphone fast-risers. Xiaomi is likely to see its rapid growth start to slow, as it faces growing challenges in global markets that aren’t quite as friendly as its home China market. Huawei should face less such obstacles due to its longer experience abroad, and should also get a boost from a growing reputation for solid product quality.
Let’s kick off this first smartphone post in the Year of the Sheep with Xiaomi, which officially took the China smartphone crown last year with 12.5 percent of the market, eclipsing the 12.1 percent for fast-fading Samsung. (English article) The final figures aren’t a huge surprise, since Xiaomi’s China sales were rising strongly throughout last year and formally passed the badly stumbling Samsung about midway through 2014.
Xiaomi’s leading market position was all the more remarkable since its China market share was only 5.3 percent in 2013, according to the new report from market tracking firm IDC. In terms of unit sales, Xiaomi sold 421 million smartphones in China last year, again a major feat for a company that was only founded in 2010.
All that said, Xiaomi will have a hard time further boosting its China market share from the current level due to stiff competition in the crowded market. Realizing that, the company has mounted an overseas drive into Southeast Asia and India, and recently unveiled plans to sell some non-smartphone products in the US. (previous post)
A recent roadblock in India involving a patent dispute, combined with its cautious US approach, highlight the kinds of challenges the company will face as it attempts to keep its breakneck growth alive. Accordingly, I doubt the company will be able to maintain its previous impressive record from the last 2 years of doubling its unit sales growth, though it should probably be able to maintain a rate of 70-80 percent.
Next let’s look at Huawei, which is changing the head of its Honor brand smartphone division. (Chinese article) The move will see company veteran Zhao Ming, who previously headed Huawei’s wireless division, take over at the helm of Honor from outgoing chief Liu Jiangfeng. There’s not much more to the report, which adds that Huawei sold 20 million Honor smartphones in 2014, accounting for less than third of the 75 million smartphones it sold for the year.
The Honor brand has struggled for an identity over the last year, emerging as a higher-end brand at some times and more recently as a low-end product. The leadership change indicates Huawei will try to sharpen the brand this year, as it pursues its broader target of selling more than 100 million smartphones. Concurrent strong growth for its higher-end Ascend Mate 7 Huawei-brand phones seem to bode well for the company, and could help it to meet its targets if it can solidify its growing reputation as a maker of high quality, reliable products.
Related posts:
