Chinese company Huawei has decided to sell its youth-oriented brand Honor. In a statement, it explained that the consumer business has been under tremendous pressure ‘due to persistent unavailability of technical elements needed for its mobile phone business’.
Huawei Investment & Holding Co., Ltd has therefore decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co., Ltd. This sale will help Honor’s channel sellers and suppliers make it through this difficult time, it said.
Once the sale is complete, Huawei will not hold any shares or be involved in any business management or decision-making activities in the new Honor company. This move has been made by Honor’s industry chain to ensure its own survival, added the statement. Over 30 agents and dealers of the Honor brand first proposed this acquisition.
Since its creation in 2013, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range. During these past seven years, Honor has developed into a smartphone brand that ships over 70 million units annually.
Comments Ben Wood, Chief of Research, CCS Insight:
“There has been endless speculation that Huawei would divest Honor, so it is an important step that this is now official. However, at this stage there is a distinct lack of detail on the next steps making it hard to understand what direction the new business will take and how it will recover? We assume that the goal will be for the new independent company to re-establish ties with Google and component suppliers.”
“It seems Huawei had few other options other than closing or divesting the Honor division given the punitive sanctions imposed by the US administration. This is underlined by the comment in the press statement that this was ‘made by Honor’s industry chain to ensure its own survival.’”
“At its peak, Honor was shipping 70 million phones annually. Given its historic dependence on Huawei for product development and scale it will be interesting to see whether an independent entity will be able to recover.”
“The Honor brand was historically focused on mid-and low-tier devices targeted at younger customers. This is one of the most competitive Android smartphone product segments so this new version of Honor will need to work hard to compete with rivals such as Realme and Xiaomi who have been aggressively focused on this market opportunity as Honor sales have declined.”