Richard Yu, chief executive of Huawei's consumer business group, said the company wants to outstrip Apple and Samsung within five years.
Senior executive of Huawei, China's largest smartphone company by shipments and the global No. 3 player, said Friday that major domestic rival Xiaomi will be "out of the game" soon and that his company aims to overpower Apple and Samsung Electronics within five years.
The bold comments by Richard Yu, chief executive of Huawei's consumer business group, which is responsible for overseeing the company's smartphone operations, come at a time when the manufacturer is enjoying solid growth at home and abroad. In contrast, sources say Xiaomi's shipments are expected to fall for the first time ever year on year in 2016.
"Xiaomi is no longer competitive and will soon be out of the game," Yu told the Nikkei Asian Review on the sidelines of the Converge tech conference host by The Wall Street Journal and founders in Hong Kong on Friday.
"In the past, Xiaomi was popular because they are good at marketing," Yu said. "However, they are lagging behind in product design and technologies. That's not sustainable."
Xiaomi dominated China's smartphone market in 2015, snagging a 15% share and shipping about 65 million handsets domestically, according to numbers from research company International Data Corp. Xiaomi said it shipped more than 70 million phones globally last year, although that fell short of its initial target of 80 million to 100 million.
Xiaomi's domestic share slipped to 9% in the January-March period, putting the company at No. 5, behind Huawei, Oppo, vivo and Apple, according to IDC.
One source said total shipments of Xiaomi handset by by FIH Mobile, a Hong Kong-listed subsidiary of Taiwanese manufacturing powerhouse Hon Hai Precision Industry, also known as Foxconn, would be down by 40% on the year in 2016, compared with a previous estimate of a 10% drop. FIH Mobile and Taiwan's Inventec Group have an equal share of Xiaomi's assembly orders.
A Xiaomi spokeswoman would not comment on Yu's statement but described the possible fall in shipments as "baseless rumors," saying demand for her company's smartphones is "very strong."
"We are continuing to work on increasing production to meet the demand for our products," she said. In stark contrast, Yu said Huawei's shipments grew 60% on the year in the first quarter of 2016, at a time when global demand for smartphones is softening.
"We see quick growth in China, fast growth in Europe, strong growth in emerging markets, and we will catch up in the U.S. and Japan," Yu said.
FIH Mobile is building a new facility in the western Chinese province of Guizhou to churn out entry-level and mid-tier smartphones for Huawei, sources told the Nikkei Asian Review.
Huawei was the world's No. 3 smartphone maker in 2015, with a market share of more than 7%, according to IDC. That is up from less than 5% in 2013. According to IDC, only three smartphone makers shipped more than 100 million units globally last year: Samsung, Apple and Huawei.
For the first three months of 2016, Huawei overtook Xiaomi as the No. 1 smartphone brand in China, controlling 16% of the market, according to IDC.
Huawei's Yu said his company's ambitions do not stop with China, and that it aims to surpass Apple and Samsung eventually.
"We want to be the world's No.1 in smartphones in five years," the executive said, adding that Huawei wants to control 25% of the global market within that period.
Yu attributed the company's success to its heavy investment in technology relative to its peers. Huawei's research and development spending was around $9.2 billion in 2015, outmatching some $8 billion Apple spent last year.
The executive said Huawei's chip unit, Hisilicon Technology, is teaming up with Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker and a major supplier of Apple's core processors, and is using TSMC's advanced 16-nanometer technology, which is found in Apple's iPhone 6s and 6s Plus phones.
"Huawei's own Kirin-series chips can overpower Apple's mobile chips," Yu said. "When our competitors could not provide further innovation, that gave us a good chance to rise.
I am not talking about who could lower the price, but I am talking about who could deliver the most advanced innovations that no one has seen in the market."
Apple did not immediately reply to a request to comment on Yu's claim.
Huawei's latest flagship product, the P9, is the world's first dual-camera smartphone and uses the renowned Leica lens technology and TSMC's most advanced chip technology, which Apple also uses. Its price tag starts at 4000 yuan ($609), compared with $689 for an entry-level iPhone 6s. Yu said Huawei has an exclusive partnership with Leica for the next five years.
In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.
Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.
Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.
Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.
South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.
Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.
Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.
Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.
According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.
Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.
The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.
“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.
In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA. Foshini also lines up to take Jet Botswana from Edcon.
The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.
CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.
TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.
Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.
Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.
According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.
Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).
The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.
The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.
Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.
When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.
Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.
The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.
Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.
BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.
“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.
The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.
UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.
“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”