76 | FORBES ASIA APRIL 2018THERE WERE NUMEROUS signs at
Huawei’s recent launch event of its P20
flagship phone series to suggest that the
Chinese tech and telecommunications
giant has made it as a premium consumer
electronics brand: The launch was held
at the picturesque (and obviously not
cheap to rent) Grand Palais in Paris; more
than 2,000 members of the media were in
attendance; Huawei billboards were plas-
tered all over Europe; and, perhaps most
important, the lack of surprise, shock or
disappointment over the over-$1,100 price tag of the P20 Pro.
Attendees—tech insiders, mostly—expected the top-end model of
Huawei’s smartphones to be priced at (or even higher than) the iPhone
or Samsung level. And why wouldn’t they? Despite recent U.S. market
issues, Huawei phones are well received by tech writers and are, appar-
ently, selling well.
In an annual business report meeting with journalists (including
myself ) held in late March at the company’s Shenzhen headquarters,
Huawei announced that its total revenue grew 15.7%, to $92.5 billion,
in 2017. More impressive, net profit grew 28.1%, to $7.3 billion, a huge
improvement over 2016’s 0.4% rate.
Huawei’s Deputy Chairwoman and Chief Financial O cer Sabrina
Meng, along with CEO Ken Hu, told reporters there are two factors
that explain how the company managed to bump up net profits and net
profit margins at a rate higher than total revenue growth: The company
became more e cient at growing smartphone sales. “In 2016, one of the
biggest areas that dragged consumer business group profits down were
the high cost of components,” said Meng. “So we developed a better sup-
ply management chain and improved our working
relationships with vendors.”
Hu, meanwhile, added that whether it’s brand
image with consumers or phone units sold, the
company saw significant improvements in 2017.
According to data released to the media, Huawei
and sub-brand Honor combined to sell 153 million
handsets in 2017, generating $37.85 billion in sales.
The privately owned Chinese company’s bread
and butter, however, is network equipment, which
generated roughly $47 billion over the past year,
though its 3% growth percentage is tepid compared
with years past or Huawei’s other departments.
Huawei also saw a 35.1% growth in its enterprise
business unit, which handles cloud and data,
though the overall revenue figure of $8.7 billion
is small.
Until 5G kicks in in a year or so—which Hu
says Huawei is on the verge of achieving—the
company’s fastest growing and most visibly
prominent area is its smartphones. Despite
having virtually no market in the U.S., Huawei
surpassed Apple as the second-biggest phone
brand in the world by units shipped, and the
company’s bold strategy to ditch the mid-tier or
entry-level market and focus on premium (ex-
pensive) smartphones seems to be paying of.
This year marks Huawei’s 30th birth-
day, and the company, following the general
Chinese idea that age 30 is when a boy truly
becomes a man, is looking for new growth. “As
we look to 2018, emerging technologies like the
Internet of Things, cloud computing, artificial
intelligence and 5G will soon see large-scale
application,” explains Hu. “Throughout this
process, Huawei will... pay special attention
to the practical challenges that our customers
face as they go digital. Our job is to help them
overcome these challenges and achieve busi-
ness success. Ultimately, we aim to bring digital
to every person, home and organization for a
fully connected, intelligent world.”
Considering the lengths to which the U.S.
government has gone to prevent Huawei
from entering its market, it doesn’t appear
the company’s ambitious
vision will include the U.S.
for now. Huawei will likely
ramp up eforts in Europe
and Latin America—but
as long as the company is
shut out of the country still
responsible for the most
high-end phones sold,
Huawei will have a hard
time achieving its ambi-
tious goal of becoming
number one.
But is No. 2 really that
bad?HUAWEI’S ASCENT
BEN SIN IS A HONG KONG-BASED CONTRIBUTOR TO FORBES.COM WHO WRITES ABOUT CONSUMER TECH. THOMAS KUHLENBECK FOR FORBES (TOP); MARLENE AWAAD/BLOOMBERG
TECHNOLOGY BEN SIN // GADGETMAN
The P20 Pro comes with a $1,100 price tag. F