Huawei continues ascend with bumper sales growth

Huawei Technologies Co, China's leading communication technology company, announced on Tuesday a more than 20 percent year-on-year growth in revenue.

Huawei's 2014 global sales revenue likely stood at 287 billion yuan ($46.29 billion) to 289 billion yuan, an increase of roughly 20 percent from a year earlier, according to unaudited financial results published on Tuesday.

Experts said that for Huawei, which has during the past years expanded into consumer devices and enterprise computing business, the acorn has now grown into an oak tree.

"In 2014, 4G networks are widely established in the global markets. The costly migration period, in which Huawei invested heavily in R&D, patent base and customer education, is over," Li Yi, secretary-general of the China Mobile Internet Industry Alliance, told the Global Times Tuesday.

The company's operating profit in 2014 likely stood between 33.9 billion yuan to 34.3 billion yuan, an increase of 17 percent from 2013, Huawei said.

Revenue at Huawei's carrier network business, which rivals world's leading telecommunications equipment maker Ericsson, grew by approximately 15 percent year-on-year. Its enterprise business expanded by around 27 percent and consumer business by about 32 percent.

"With carrier network business still accounting for the bulk of Huawei's revenue, Huawei's focus on its enterprise business in the recent years has paid off," IDC said in a research note e-mailed to the Global Times Tuesday.

According to IDC, just in first three quarters of 2014 in Chinese mainland market, Huawei's x86 server revenue grew by 80 percent year-on-year and their revenue from external disk storage achieved a year-on-year growth of 58 percent during the same period, which are the highest among the major players in the market.

Back in 2010, the carrier network business accounted for about 66 percent of Huawei's total, according to the company's annual report.

Li said Huawei's consumer business grew rapidly in 2014, thanks partly to an Internet marketing strategy resembling that of rising start-up Xiaomi Inc.

Yu Chengdong, CEO of Huawei's Consumer Business Group, said on December 31, 2014 that the company shipped more than 75 million smartphones in 2014, over 40 percent year-on-year growth, making it the world's third-largest smarphone maker and narrowing its gap with the market leaders Samsung and Apple.

"What's noteworthy is that several of Huawei models have good profit margins, which indicates the company is already starting to benefit from a brand value premium," Li said.

On January 4, Chinese Premier Li Keqiang paid a visit to the company's headquarters in Shenzhen in South China's Guangdong Province. The visit was seen by the media as a recognition of the company's achievements.

"With its new products, such as chips with a fat margin and fast-charging gadgets, which have huge potential, Huawei will find its future voyage less bumpy," Li said.

Xiaomi, on the other hand, faces growth bottlenecks in its overseas expansion as it has to pay for patent royalty fees due to its fewer self-owned patents, he noted.

"As Huawei is able to benefit from synergies of its three business groups, it will grow from a company into a phenomenon in the coming era powered by Mobile Internet technologies. Think of Apple plus IBM," Li told the Global Times.

However, as Huawei reaps rewards from its three growth engines, it will also find such synergies more difficult to achieve as its three businesses evolve further and become more independent, Fu Liang, a Beijing-based independent IT industry analyst, told the Global Times Tuesday.

"The three different business groups have inherent differences in terms of sales channels and target customers. They are like three arrows. As these arrows come closer to customers, which they have to, their gap will widen," Fu noted.

This change poses a hefty challenge to the company's management methods and operating tactics, human resources alignment, and staff training, he said.