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Huawei forced the millet to pull down Samsung
Huawei's smartphone sales, led by Ren Zhengfei, exceeded 100 million units last year, while Xiaomi fell short of its 80 million target, leaving Lei Jun quite frustrated. Huawei is optimistic about the opportunity to overtake Samsung as the market leader. What is the secret behind its success?
The global smartphone market has matured, with both Samsung and Apple experiencing slow growth. Xiaomi, which had been growing steadily for years, is now facing a slowdown. However, Huawei, which sold more than 100 million smartphones in 2023, not only holds the third position globally but also aims to challenge Samsung’s dominance in the coming years.
In early January, Huawei launched the Y6 model in South Korea, selling 20,000 units per week and setting a new record for Chinese phone sales in the region. Priced at just $127, the device offers full functionality and has captured the attention of Korean consumers who have long favored Samsung. Previously, Chinese brands accounted for only 1-2% of the South Korean market, but this year, Huawei expects to capture around 5%, marking a significant breakthrough.
In China, where the market accounts for 30% of the global smartphone industry, Huawei has performed exceptionally well. In 2015, it achieved a 13.6% market share, taking the top spot. Apple followed closely with 11%, while Xiaomi came in third with 10%. Meanwhile, Samsung’s market share dropped from 18.2% in Q2 2013 to 7.7% recently, pushing it down to fourth place.
Huawei’s success isn’t limited to the domestic market. Last year, it sold 108 million smartphones, becoming the third brand to surpass 100 million units in history. While Samsung sold over 300 million and Apple shipped more than 200 million, Huawei focuses on international markets. It has expanded into Spain, Portugal, and other regions, where its market share has surpassed that of Samsung and Apple. According to Huawei, overseas revenue accounted for over 30% of total sales last year, with an expected increase to 40% this year.
At the recent CES in Las Vegas, He Gang, president of Huawei’s mobile product line, said, “The 100 million milestone is not much. We still have a lot of room for improvement.†He predicted that the second 100 million would be achieved faster than the first.
The smartphone industry is highly competitive, with many brands rising and falling each year. Some predict that Huawei may one day replace Samsung as the market leader. As early as May 2023, Yu Chengdong, executive director of Huawei’s consumer business group, stated that Huawei had the potential to surpass Samsung in the smartphone sector.
Huawei’s confidence stems from its unique competitiveness and corporate culture. It is the world’s largest telecommunications equipment manufacturer and has successfully entered the consumer market—a rare feat among global companies. Unlike others, Huawei has invested heavily in R&D, allocating over 10% of its revenue to research and development. In 2023, its revenue reached $46.5 billion, with $5.6 billion invested in R&D. The company also maintains a "dumbbell-shaped" workforce, with 40% of employees focused on R&D and marketing, while the remaining 20% handle administrative and production tasks.
In terms of smartphone development, Huawei has focused on improving underlying technologies like chip design and multimedia capabilities. It has filed over 76,000 patent applications, including 18,000 related to mobile devices. Additionally, Huawei has established design centers in South Korea, Japan, the U.S., France, and the UK, influencing global design trends.
While Huawei lags behind Samsung in semiconductor manufacturing, it excels in telecommunications equipment and has secured strong positions in China and emerging markets. With the expansion of 5G, Huawei’s influence is expected to grow further.
In terms of management and talent development, Huawei has implemented a rotating CEO system and opened company equity to all employees—practices uncommon in private enterprises. This has helped attract top talent and foster innovation.
Meanwhile, Xiaomi, led by Lei Jun, has faced challenges. Although it reached 100 million shipments in 2023, it missed its target. Lei Jun admitted that the pressure was high, and he plans to focus on innovation and creativity, launching the Xiaomi Exploration Lab to explore advanced technologies like VR and robotics.
Xiaomi’s past success relied on online marketing and fan engagement, but as the market matures, it faces new challenges. Its $45 billion valuation may seem high if it cannot maintain rapid growth.
In summary, Huawei and Xiaomi represent two different paths in China’s tech landscape. Huawei embodies “thick innovation†with long-term R&D and deep technological investment, while Xiaomi represents “thin innovation†through fast-paced business models and creative strategies. Both face their own challenges, but their journeys highlight the evolving dynamics of China’s tech industry.
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