Behind the scenes of Ren Zhengfei’s proposal that Honor can overthrow Huawei, is it confidence in Huawei’s brand? Or is there another secret?
New Honor can be Huawei’s strongest competitor in the world, surpass Huawei, and even call Huawei down. Ren Zhengfei did this to inspire the Glory team when he delivered a speech at his rather touching Glory farewell meeting.
The question is, why did Mr. Ren make such a statement?
—— Confidence in Yu Chengdong’s combat power? Or seeing that Huawei’s chips are blocked, and Xiaomi and OV are taking advantage of the fisherman, it is better to give in to the new glory?
——In history, there have been few successful people who have left Huawei to start their own businesses independently. In 2019, the Huawei brand ranked second in the global market. What does Honor rely on to surpass Huawei?
Thinking of the previous situation of Huawei entrepreneurs, Ren Zhengfei’s generosity is a bit strange.
Ren Zhengfei warned Glory: “Once you get divorced, don’t be disconnected.” He emphasized that Glory is completely independent in management and operation. This is exactly what the market is worried about. Without the glory of Huawei’s system, what is the strength of the battle? Where will it exert its strength?
The Honor brand is not harmonious within Huawei CBG. It is conceivable that the Honor brand team has full motivation to prove themselves.
And Ren Zhengfei and the Huawei system also need the excellent performance of glory. There are rumors that, like most of the giant transactions, the buyers of New Glory have also designed gambling terms for this transaction. Under the valuation of 40 billion US dollars, New Glory needs to have a strong enough performance.
Overseas, IoT, glory efforts
On November 17, a number of companies issued a “Joint Statement” pointing out that this acquisition is a self-help and market-oriented investment initiated by the glory industry chain, which can maximize the protection of the interests of suppliers and other parties.
As an independent brand, after breaking away from Huawei’s influence and quickly resuming production, the new glory that has gained vitality will use the existing nearly 11% market share to inject vitality into the supply chain channel and save the moment. Huawei will also use the funds from the sale of Honor to spend the winter, killing three birds with one stone.
After Huawei announced the sale of Honor, more than one supplier shareholder has announced a capital increase.
On the evening of November 25, Tianyin Communications increased its shareholding ratio from 1.74% to 17.97% by increasing its capital to 500 million yuan in Honor’s parent company, Star Alliance Information. Coincidentally, Ai Shide and his team increased the investment to 660 million yuan, the investment amount also expanded by more than 20 times, and the shareholding ratio increased from 2.18% to 23.72%.
The overtones of the two major suppliers increasing their capital are clear: they are optimistic about the future of the new glory. What is the reason? As the first manufacturer to openly sort out the relationship between Honor and its relationship, Tianyin Communication revealed a lot of information at the capital increase exchange meeting.
The team of New Honor has a complete framework from management, R&D, technology, products to sales: including the existing Honor product and sales team, more than 6,000 R&D personnel from Beijing Research Institute and Xi’an Research Institute, Huawei executives such as Wan Biao and overseas Vice President of Product Line, Head of Overseas Region, etc.
In terms of overseas and IoT, Zhao Ming has enough space.
The market is generally most worried about the glory after leaving the Huawei system and the continuous ability in product research and development. Previously, Huawei’s product team, especially He Gang and other executives, helped a lot with Honor brand products.
What does the new glory’s products rely on?
As the earliest established one of Huawei’s five research institutes, the North Research Institute has a deep relationship with Honor. Previously, the innovative design of the Honor mobile phone was all from the North Research Institute. This time, it is divided together, and it will undoubtedly serve as the innovation of Honor mobile phones. It will also become the source of Honor’s high-end product line.
The Xi’an Research Institute is the birthplace of many best-selling products such as the P8 Youth Edition, Honor 3C, and Honor 3X. After this division, it will be responsible for the research and development of low-end products aimed at young people. It can be seen from the development of the R&D team that Huawei has considered the division of the team carefully.
If the overseas team is divided into Honor, it will kill two birds with one stone. This not only indicates that the new Honor will develop differentiated from Huawei’s high-end machines, but also will focus on overseas markets where Huawei will currently be absent, which is conducive to the development of the new Honor. On the other hand, the expansion of overseas channels will also be one of the future growth points of New Glory. In this regard, the resources of suppliers will also play a role. Taking Tianyin Communication as an example, it can cover more than 20 countries.
Comparing with Xiaomi and even Huawei, the layout of the IoT ecosystem based on mobile phone products has become a very natural choice for New Glory. Tianyin Communication mentioned that this will be another growth point. In terms of research and development, Huawei has considered the division of the team carefully – the West Research Institute will cover the research and development of chips, wearable devices, etc. At the same time, IoT products based on communication modules will bring much higher gross profit than mobile phones. It will create higher profit margins for supplier shareholders.
Tianyin Communication pointed out that the gross profit of IoT and other related equipment will reach about 20%, which is much higher than that of Honor’s low-end mobile phones. This is undoubtedly one of the important reasons why suppliers are willing to participate.
Why overthrow Huawei
With many high-quality resources independent from Huawei, the goal of the new glory should not only be “Xiaomi”. From the very beginning, Honor was separated from the Huawei system because of the emergence of Xiaomi mobile phones. As of 2019, the shipment of Honor mobile phones is more than 44 million, which is comparable to Xiaomi.
But this is an achievement under the “suppression” of high-end mobile phones in Huawei’s system. It is said that Honor has always had many discords with Huawei’s system. Now that it has stepped out of Huawei, New Glory can open up to competition in the free market, and its potential cannot be underestimated.
In his speech, Ren Zhengfei expressed his parting words for New Glory. In addition to the supply chain, management and other aspects, the rest is the expectations of the previous wave for the latter. I hope that the new glory will never be “merciful” and surpass Huawei. .
Huawei’s biggest problem may not be the competition from its peers. Currently affected by the US ban, Huawei’s supply chain has been greatly damaged, and the huge space left after the smartphone is forced to withdraw from the market is an excellent opportunity for glory to expand.
Selling Glory, Yu Chengdong’s problem is not over yet
A few days ago, Xiaomi released a financial report showing that Xiaomi Group’s revenue from smartphones in the third quarter reached 47.6 billion yuan, a year-on-year increase of 47.5%, and smartphone shipments reached 46.6 million units, a year-on-year increase of 45.3%. The dividends left after Huawei’s withdrawal from the market have been reflected in Xiaomi, so Xiaomi’s previous shipments have also entered the top three in the world.
As a glory comparable to Xiaomi’s strength, it is inevitable to grab meat from Xiaomi’s mouth, and in the future, with the creation of the entire product line, it is not impossible for the new glory to enter the high-end mobile phone market. However, it faces the same problem as Xiaomi. High-end mobile phones involve the building of brands, supply chain and many other aspects. It is not easy to enter the high-end market with the glory of being handy in low-end phones.
As a distributor of high-end mobile phones such as Apple, Samsung, and Huawei, Tianyin Communication pointed out when answering reporters’ questions that with Honor’s high-end products, Tianyin Communication and Honor will have the possibility of cooperation. In other words, whether Honor can enter the high-end market is still unknown.
Of course, for New Glory, the most urgent problem to solve now is to reconstruct the supply chain. In his speech, Ren Zhengfei mentioned that supply is a very complex and complicated issue, and the difficulty faced by New Glory is greater than that of any new company.
The Financial Times, citing Gartner analysts, also pointed out that due to the separation of the supply chain between Honor and Huawei, the new Honor may face huge cost pressures.
In this regard, the supplier Tianyin Communication said that it still respects the principle of marketization, and not all suppliers will cooperate with Honor and participate in the supply chain system of Honor. This statement basically finalized the fact that Honor had to go through the market baptism in the reconstruction of the supply chain.
The entry of products relies on the rapid response of the supply chain, and the rapid reconstruction of the supply chain is the first step that Glory has to take. At present, Tianyin Communication pointed out that the spin-off of Honor is still in its early stage, and with the entry of more capital and the layout of product lines, the layout planning and strength of the new Honor will be more concrete and clear.