Analysts warn it may not easily connect with overseas consumers despite domestic success with new models
The Consumer Business Group of Huawei Technologies Co recorded revenue growth of nearly 70 percent in 2015, driven by strong smartphone sales.
The Chinese leading telecommunications equipment manufacturer said full-year revenue in the consumer business unit grew to more than $20 billion, with shipments exceeding 100 million smartphones in 2015, Yu Chengdong, CEO of Huawei Consumer Business Group, told a press conference on Tuesday U.S. time in connection with the annual tech event known as the Consumer Electronics Show in Las Vegas, Nevada.
The company's 2015 smartphone sales were up 44 percent from a year earlier, despite an increasingly saturated domestic market.
"Thanks to Huawei's aggressive online promotion and clear product positioning, the company's brand awareness was greatly enhanced in China last year, making it possible to erode the market share of rivals such as Samsung and Xiaomi," Zhang Yi, CEO of market consultancy iiMedia research, told the Global Times Wednesday.
The top position of Xiaomi, which mainly sells phones online, will be threatened by Huawei, which is actively expanding its physical sales network in second- and third-tier cities, said Zhang.
Huawei held a 16.2 percent share of China's smartphone market in the third quarter of 2015, up 4.1 percentage points from the previous quarter, lagging behind market leader Beijing-based Xiaomi Inc. Xiaomi's market share fell 2 percentage points quarter-on-quarter to 16.4 percent in the third quarter, global industry research firm IHS Technology said in October.
Weak smartphone demand in China, the world's largest smartphone market, is expected to bring down the worldwide shipment growth rate year-on-year to 9.8 percent in 2015, the first single-digit level ever, US market consultancy International Data Corp said in a report on December 3. In 2014, the year-on-year growth rate was 27.6 percent.
Analysts said that things would get worse in 2016, which would pose a big challenge to not only Huawei but also foreign big-name brands such as Apple Inc.
Citing unidentified sources, Japan's Nikkei newspaper reported on Wednesday that Apple is expected to scale back production of its latest iPhone models - the iPhone 6s and 6s Plus - by about 30 percent in the first quarter of 2016, due to mounting inventories.
"Worldwide smartphone demand will continue slowing in 2016, as makers aren't able to offer models with killer features that can speed up consumers' phone replacement," Wang Yanhui, head of Shanghai-based market research company Mobile China Alliances, told the Global Times Wednesday.
Huawei is unlikely to maintain the same high growth rate in 2016 as it achieved in 2015, and its recent aggressive overseas expansion won't do much to offset slack domestic conditions, said Wang.
The launch of the Huawei Mate 8 for overseas consumers announced during the Tuesday conference is Huawei's latest effort to make a dent in the foreign market.
The new flagship smartphone, featuring similar functions and designs as the one sold in China, is scheduled to launch in many countries and regions in Western Europe and the Middle East this month, starting at a price of 599 euros ($642), according to a press release the company sent to the Global Times Wednesday.
In China, the Mate 8 has been sold at a start price of 2,999 yuan ($458) since its launch on December 9, the press release said.
The company said on Wednesday that the higher price tag for the overseas version of the Mate 8 indicates its great confidence in markets beyond China.
However, both Zhang and Wang said it would be hard for Huawei to extend the success of the Mate 8 in the domestic market into overseas battlegrounds.
Western consumers aren't familiar with Huawei and are unlikely to give a warm reception to the high-priced Mate 8, said Zhang.
"The presence of the Mate 8 in the overseas market mainly aims to enhance Huawei's brand awareness instead of boosting overall revenue," Zhang noted.
