Huawei likely to see slower growth in 2017

Updated 2017-01-03 09:25:36 Global Times

Telecommunication giant faces rising competition from domestic brands

Chinese telecommunication services provider Huawei Technologies Co is likely to see its growth slow in 2017, as it faces fierce competition from domestic brands such as Vivo and OPPO, analysts said on Monday.

Although the company said revenue grew 32 percent to 520 billion yuan (.8 billion) in 2016, Huawei must adjust its strategy by expanding its domestic sales channels, said Wang Yanhui, head of the Shanghai-based Mobile China Alliance.

"Although sales of Huawei's P9 have surpassed 10 million devices, sales of its competitor OPPO are expected to have reached 20 million to 30 million in 2016, thanks to its R9," Wang told the Global Times on Monday.

To boost growth, Huawei has to do more to expand its sales channels, which is how other brands - Vivo and OPPO - have seized larger market shares, he said.

Huawei will focus on profit growth and continue to be consumer-driven, Xu Zhijun, the company's rotating CEO, said in a post published on Huawei's WeChat account on Friday.

Over the past few years, the company has maintained double-digit growth, but it now has to improve its operating efficiency and cash flow, Xu stated in the post.

In the third quarter of 2016, OPPO and Vivo overtook Huawei for the first time in China's smartphone market. The sector has evolved beyond operator- and online-driven channels to an offline structure that dovetails with the strengths of the two brands, according to market research firm IDC's latest post published in October 2016.

OPPO topped the ranking of China's top five smartphone brands in the third quarter of 2016 by shipping 20.1 million devices, IDC noted. Next came Vivo, which shipped 19.2 million devices.

However, the sales momentum of Huawei's P9 shows that the company has successfully tapped into a higher-end market segment, said Liu Dingding, a Beijing-based independent industry analyst.

"Aiming at a more high-end segment by putting more effort into research and development reflects market trends. That will become Huawei's strength," Liu told the Global Times on Monday.

Over the next three to five years, Huawei will be among the two or three smartphone manufacturers in the world that survive reshuffling, Yu Chengdong, CEO of Huawei's Consumer Business Group, said in a separate post published on the company's WeChat account on Sunday.

Revenue for the company's consumer business probably rose 42 percent year-on-year to 178 billion yuan in 2016, the post stated.

The company's goal is to beat Apple and to become the world's second-largest smartphone maker over the next two years, Yu told Reuters during the IFA Electronics Show in Berlin in September 2016.

"Considering its revenue growth, Huawei may eventually surpass Apple, but not in terms of setting trends," Liu said, noting that the US technology giant can still tell where the market will go.

Samsung ranked as the largest smartphone manufacturer worldwide in the third quarter of 2016, when it shipped 72.5 million devices, according to IDC data published in October 2016. Samsung held 20 percent of the global market, followed by Apple, which had 12.5 percent. Huawei ranked third, with 9.3 percent.

"It's still too early to tell whether Huawei will surpass the other big brands, particularly in terms of profit margins," Wang said.

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