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September 15, 2014

Huawei: Why we’re struggling in Chinese smartphone market

Smartphone maker dumps Microsoft and calls itself a "strange" company.

By Ben Sullivan

Huawei is struggling to overcome smartphone saturation in China as it refocuses on overseas and emerging markets.

The Chinese telecoms firm, currently the third largest smartphone vendor in the world according to IDC, called itself a "strange company" and admitted to faring poorly in China as it hopes to boost sales abroad.

Shao Yang, VP of the consumer business group marketing department, told a room of reporters visiting the Huawei campus in Shenzen today: "Huawei is a strange company, we’re not good at the Chinese market."

Figures from the country’s National Bureau of Statistics show the uptake of new smartphone users is dropping rapidly.

In 2012, China’s mobile penetration was 89%, with 82% of that being smartphones. In addition, research from IDC points to Chinese smartphone shipments rising just 10% next year compared to a 64% increase in 2013.

Huawei is in fact doing better globally than it is in China, placing third in the world’s biggest smartphone makers in IDC’s Q2 2014 report.

Yang said that it is hard to "catch the trend" in China, and claimed the most important thing for the vendor’s devices business right now is finding success overseas.

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He explained how innovation, particularly with cameras, applications, and screen sizes, will keep consumers buying new smartphones year after year.

But 2014 shipments still look optimistic for Huawei. It shipped 64.2 million devices in the first half of this year, a 62% increase on the same period last year.

Of that, 34.3 million smartphones shipped internally, making Huawei the fifth most-shipped smartphone maker in China, a country of 1.2 billion mobile subscribers, according to Yang, who pointed to a 48%-52% split between foreign and domestic shipments.

China accounted for 37% of global smartphone shipments in Q2 2014, with four-year-old Apple competitor Xiaomi getting top spot within the country. Apple was the second largest smartphone vendor.

Yang said: "The market is stable, and Samsung is going down."

Yang also admitted to Huawei suspending relations with Microsoft, no longer using Windows as an operating system for its phones.

He claimed Microsoft’s operating system doesn’t leave a lot of room for developers.

A Huawei spokesperson later following this up with a statement that said: "Open source and web-based platforms like those provided by Tizen and Google are good collaboration opportunities for key industry players. We are putting any releases of new Windows phones on hold."

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