Chinese telecoms giant Huawei announced Tuesday, November 17, that it had sold its Honor phone brand, an operation it said was necessary to save the brand in the face of tensions caused by US sanctions on its supply.
The private group – one of the three main smartphone manufacturers in the world – is in the crosshairs of President Donald Trump, who suspects it of potential spying for the benefit of Beijing. The military background of the company’s founder, Ren Zhengfei, as well as his membership in the Chinese Communist Party, fueled suspicions about the regime’s influence on the group.
Washington has taken steps to drive Huawei out of the U.S. market, deter U.S. companies from collaborating with it, and cut its global supply of semiconductors and other components.
“Terrible pressures”
Honor – an entry-level brand aimed primarily at young people and on a budget, which Huawei says sells some 70 million phones a year – was bought by a consortium of forty Chinese companies including distributors, agents and others companies whose survival depends on the survival of the brand, Huawei and the consortium said in separate statements.
After this sale, Huawei no longer has any shares and “Is no longer involved in the business management or in the decision-making of the new company Honor”, he said. The Chinese telecom giant says its production of consumer devices “Is under tremendous pressure” due to US sanctions and hope that “The sale will help Honor vendors and suppliers weather this difficult period” and that by leaving the group’s orbit, the brand will be able to resume its supply of components.
“This acquisition is a market-driven investment, in order to save Honor’s industrial chain”, said the consortium of buyers on Tuesday. “This is the best solution to protect the interests of consumers, vendors, suppliers, partners and Honor employees. ” Among the buyers are listed companies, including the Chinese retail and online giant Suning.com.
Accumulation of bad news
Washington has also increased the pressure on its allies to ban Huawei’s 5G equipment. The Chinese company has always firmly denied the accusations of the Trump administration, and attributes the offensive to which it is subject to the desire of the United States to eliminate a powerful competitor.
In fact, the sale of Honor will probably weigh down the manufacturer in its race for global sales of smartphones, against its South Korean competitors Samsung and American Apple. Huawei had become the world number one in the second quarter of 2020, before falling back to second place in the third quarter, according to the research firm Canalys.
Bad news has accumulated in recent weeks for Huawei. At the end of October, the group reported a sharp slowdown in its turnover over nine months. It was also excluded from Sweden’s future 5G network after a similar move in the UK this summer. The Swedish justice, however, suspended this exclusion pending a decision on the merits.
