Analysis

Is Huawei poised for big things?

Chinese firm's financial results show huge growth in developing markets

24 Jul 2015

Chinese manufacturer Huawei has surged ahead to become the dominant player in the Chinese smartphone space.

The company, which posted its financial results for the first half of 2015 yesterday, saw a 124 per cent year-on-year (YoY) revenue growth in its native Chinese market.

According to analyst firm GfK, Huawei now has the dominant market share in the country, surpassing both Apple and Samsung.

This news could prove worrying for other key companies in the smartphone sector, as China represents a huge and incredibly profitable emerging market for consumer tech.

The first half of 2015 saw Huawei's handset arm generate more than $7.2 billion in revenue, with a YoY growth of 87 per cent.

The company ascribes this growth to its strategy of focusing on high-end and mid-range devices, which it says has led to an increase in shipments and average selling price.

North Africa also experienced impressive growth, to the tune of 164 per cent YoY. In Italy and Spain, the company's high-end models like the P8 and P8 Max drove 293 per cent and 448 per cent growth respectively.

A Huawei spokesperson said "this focus on high-end models has led to an increase in brand awareness and reputation across Western Europe, and as a result the brand value premium has also gone up."

"Looking ahead, the Huawei Consumer Business Group aims to sustain this growth momentum we have created over 2014 and across H1, and further consolidate Huawei's leading position in the high- end smartphone market."

CEO Richard Yu also expressed his pleasure with the result, saying "this incredible growth is a testament to our core business strategy to offer premium quality products, bringing our expected earnings for 2015 from USD 16 billion to USD 20 billion."

"With our consistent and huge investment in R&D, Huawei is set to become one of the key players in the long-run."

Gartner's Roberta Cozza was somewhat sceptical about Huawei's ability to build premium brand currency, noting that "in the west, they've been very active on the mid to lower end of the smartphone market".

However, she noted that Huawei does have a strong advantage over similar Asian companies in the space. "It's the relationship that they have with the channel in Europe", she said; "with the carriers, but also with retail," she said.

"Of all the Chinese players, I believe that Huawei is the best positioned to succeed, because they have already been building brand awareness in Europe."