Huawei is urged to sell its youth brand

Several media including BBC reported that Huawei is going to sell off its HONOR brand.

Chinese smartphone maker Huawei is selling its youth-focused budget brand Honor.

Huawei said Honor had been under “tremendous pressure” due to “a persistent unavailability of technical elements”.

US government sanctions have restricted supplies to Huawei on the grounds that the firm is a national security threat.

Huawei said it would not hold any shares or be involved in managing the new Honor company.

“This sale will help Honor’s channel sellers and suppliers make it through this difficult time,” the Chinese telecommunications giant said in a statement.

Huawei said it will sell Honor to Shenzhen Zhixin New Information Technology, a new company set up for the acquisition.

The company is a consortium of more than 30 agents and dealers of the Honor brand, and according to Chinese media, also includes the State-backed Shenzhen Smart City Technology Development Group.

Huawei gave no indication of the sale price.

Huawei established the youth-focused brand in 2013, offering phones in the lower and middle price ranges.

Honor ships 70 million units annually, according to Huawei.

It sells smartphones through its own websites and third-party retailers in China. It also sells its phones in Southeast Asia and Europe

Who is Huawei?

Based on its homepage, the company profile of Huawei is described as follows.

Founded in 1987, Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. We have more than 194,000 employees, and we operate in more than 170 countries and regions, serving more than three billion people around the world.

Our vision and mission is to bring digital to every person, home and organization for a fully connected, intelligent world. To this end, we will drive ubiquitous connectivity and promote equal access to networks; bring cloud and artificial intelligence to all four corners of the earth to provide superior computing power where you need it, when you need it; build digital platforms to help all industries and organizations become more agile, efficient, and dynamic; redefine user experience with AI, making it more personalized for people in all aspects of their life, whether they’re at home, in the office, or on the go.

Huawei is a private company wholly owned by its employees. Through the Union of Huawei Investment & Holding Co., Ltd., we implement an Employee Shareholding Scheme involving 104,572 employees. Only Huawei employees are eligible to participate. No government agency or outside organization holds shares in Huawei.

Who is HONOR?

Based on its homepage, there are several pieces of information of HONOR in the following way.

  • ABOUT HONOR: Our purpose is to provide an unforgettable experience in every scenario in the lives of our users. We do that by being obsessed with design and creativity, by being unique and compassionate, and by creating the kind of groundbreaking culture and TechChic lifestyles for those who are connected, innovative, and open-minded.
  • PURPOSE: Inventing an intelligent new world for the young,* busy, and connected. *Young at heart
  • CULTURE: We appreciate unique attitudes. As a young and disruptive tech brand, HONOR pioneers the chic lifestyles of a tech-native generation who want to be themselves.
  • VALUES: Our values are our slogan, HONOR MY WORLD. As a brand, we want all young people to seize the day and take action with the phrase “HONOR My World.”

Trade war affects the landscape in smartphone industries

As we know, the trade war becomes more intense since 2018 and it is difficult for us to forecast what it will be going on, when it will be solved, and of course, how it will be solved. Therefore, if we were to be the management in the companies whose businesses are affected by the trade war, we have to think of how to react it. In this sense, it is better for us to keep nonmarket strategy in our mind.

According to MIT Sloan Management review, nonmarket strategy is defined as follows.

Nonmarket strategy recognizes that businesses are social and political beings, not just economic agents. Because companies create and distribute value, a plethora of actors seek to influence them — formally, through laws and regulation, and informally, through social pressure, activism and efforts to shape the public perception of business. Companies can’t escape this. Smart executives, therefore, engage with their social and political environment, helping shape the rules of the game and reducing the risk of being hemmed in by external actors. Yet, few companies are prepared to do the hard work and commit long term to developing an effective nonmarket strategy. Fewer still understand how to integrate market and nonmarket strategies to sustain competitive advantage.

from MIT Sloan Management

As we see this definition, we can easily understand that smartphone industry is social and political being. If we were to be the management above and hoped the trade war would be over as soon as possible, it would be the waste of time. This is because countries, especially the US and China, are bigger than companies themselves and we cannot control (even predict) how they behave. Therefore, if we were to be Smart executives like the MIT Sloan’s article, we should spend our time to integrate market and nonmarket strategies to sustain competitive advantage. To do so, business intelligence is essential and important.