Huawei CEO Richard Yu presents Huawei's new smartphone, the Mate S, ahead of the IFA electronics show in Berlin, Germany, Sept. 2, 2015. (Photo : Reuters)
Despite slowing growth, Huawei Technologies Co.’s sales of smartphones and other consumer products are shoring up in China’s economy, with global retail revenue expected to grow 30 percent next year to more than $20 billion, according to the company’s top executive.
Richard Yu, head of Huawei's consumer business group, said on Friday that the ongoing slowdown in China could still trigger consolidation in the domestic smartphone market and benefit the company.
"The cool down is good for us, there are too many competitors in the market," Yu told the Wall Street Journal during the IFA trade show in Berlin, Germany.
One of the world's key suppliers of telecommunications equipment to global carriers, Huawei has been expanding rapidly in China's smartphone market, with approximately 425 million smartphones expected to be shipped this year.
Globally, Huawei is the third-largest smartphone maker by shipments in the second quarter, behind Samsung Electronics Co. and Apple Inc., according to data from research firm IDC.
The Shenzhen-based company's smartphone shipments rose from 39 percent to 48.2 million units in the first half of this year. In comparison, its closest rival, Xiaomi Corp., posted 34.7 million smartphones in sales in the same period.
To sustain growth, Huawei is shifting its sights toward high-end smartphones. Earlier this week at the IFA, Huawei unveiled its Mate S smartphone, its most expensive model at 750 euros ($845). Yu said that the company aims to sell "several millions" of the Mate S this year, after selling three million in the first four months of its previous flagship phone, the P8, which was launched in the spring.
"In terms of technology we can do better than our competitors, but we need some time to build up the trust of the brand," Yu said, noting that entering the high-end segment is logical for Huawei as it has supplied low-cost devices to mobile operators to be sold under their respective brands.
"With high-end phones we have a higher profit margin, so more money to invest in research and development," he added, declining to give specific figures.
Yu, however, pointed out that the company will not be increasing its spending on marketing drastically, saying that Huawei already spends less than 10 percent of its consumer products revenue to promote its products.
He also shared his ambitious target of becoming the world's biggest smartphone provider within three to five years, although he cautioned it could take longer.
"We don't want to be just number two, that is not our company DNA, we want to be the number one," Yu added.
Still, Yu's dream may be a long way to go. In the U.S., Huawei's market share is less than 1 percent, according to the IDC.
The company was also criticized in a U.S. congressional report in 2012 for allegedly posing a threat to national security, as its telecom equipment could be used for spying by the Chinese.
Huawei has denied the allegations.
