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Entries in China brands (1)

Wednesday
Apr242013

Huawei's brave new world

Huawei’s abandonment of the US market and the trimming of its enterprise sales forecast are the biggest news items out of its annual analyst event in Shenzhen Tuesday.

Yet in both case there is less than meets the eye.

Huawei is not going to win any major US network deals in the current Washington environment, so the remarks by executive VP Eric Xu merely reflect reality. And it certainly has a handset business there.

It might have cut the topline forecast for its new enterprise group, but it's still aiming for a hefty $10 billion in sales by 2017 – equivalent to three-quarters of ZTE’s total revenue last year.

For me, the biggest take-outs are twofold: Huawei’s diversification looks to be on track; but to succeed it has to go where almost no other B2B company has gone in creating a global brand.

On diversification: the enterprise business unit in its second year grew 26% in 2012 and has target growth of 45% this year. Assuming that growth remains profitable, the 2017 target looks achievable.

By that time the company hopes to reduce carrier equipment sales to just 60% of total revenue, compared with 73% last year, and increase handsets to 25% (22% for the past two years) and enterprise to 15% (5%).

On the brand: In a frank presentation, Shao Yang, Huawei's devices chief, said building the brand would be harder than developing the software and hardware. The Interbrand CEO told him there wasn't a single brand on the Interbrand 100 that was big in both B2B and B2C (IBM was the closest). And Huawei doesn’t have anything like Samsung’s $12.5 billion budget.

I’ll be posting more about Huawei here and at Light Reading in the next couple of days.