Huawei emerging as Samsung’s strongest smartphone rival
June 2, 2014 Leave a comment
Huawei emerging as Samsung’s strongest smartphone rival
Staff Reporter
2014-05-30
In October 2009, the operating profits of Samsung Electronics exceeded the combined operating profits of nine leading Japanese electronics firms, including Sony, Panasonic and Hitachi, which could be attributed to the fact that South Korean firms had become bolder than Japanese rivals during the economic recession and had stepped up investment when Japanese companies had scaled back.
South Korean media reports have recently focused on Chinese smartphone maker and telecommunications equipment giant Huawei Technologies. South Korean IT experts believe that if any company can catch up with Samsung as the world’s leading smartphone manufacturer, it will definitely be Huawei.
Huawei has now become the world’s third largest smartphone maker and the largest telecommunications equipment supplier, recently overtaking Ericsson.
According to the Chinese-language Economic Observer, Huawei owes its success to its research and development (R&D) ability. In 2013, Huawei allocated 30.7 billion yuan (US$5.1 billion) to R&D, equivalent to 12.8% of its annual operating income.
Over the same period, Samsung spent US$14.4 billion on R&D, equivalent to 6.5% of its operating income. Some 45% of Huawei’s employees work in the R&D division, compared to only 26% for Samsung.
Over the last decade, Chinese firms have not only penetrated the market with their low-cost products, but have also started to tap into the high-end sector.
The Competitive Industrial Performance Index released by the United Nations Industrial Development Organization (UNIDO) showed that South Korea was in the fourth spot, behind Japan, Germany and the United States while China had reached seventh, up from the 23rd in 2000.
The Economic Observer reported that Chinese firms have benefited from the enormous and emerging domestic consumer market. If they manage to score a larger share at home, they are then well set to establish a firm footing in the global market, the report said.
Even though Chinese companies such as Xiaomi and Lenovo started out offering products, they are now able to compete with Samsung through middle and high-end devices, it said.
Despite the strong challenge posed by Chinese firms, Samsung still holds an outstanding competitive edge with the vertical integration of its supply chain, however.
A decade ago, no one would have expected Samsung to replace Nokia as the world’s largest phone manufacturer. But will Huawei also overtake Samsung in a decade?
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