One Chinese’s technology giants, Huawei, has resorted to selling its brand, Honor, to a government-backed consortium. Huawei commenced with the measure to avoid more sanctions from the US. Despite the intention behind the strategy, analysts still worries about the future of Honor.
Shenzhen Zhixin New Information Technology is now the new owner of Honor’s assets. Founded by Shenzhen Smart City Technology Development Group, the consortium consists of local government-linked energy, healthcare and investment firms. Accordingly, the association claims to have more than 30 “agents and dealers” of Honor brand. Through the new ownership, Shenzhen Zhixin New Information technology hopes to “help Honor’s channel sellers and suppliers make it through this difficult time,” as noted from Forbes.
Huawei: selling Honor for its future success
Huawei is among the companies blocked by the US. The ban that took effect two months ago has since restricted Huawei and its affiliates from doing business with the US organizations. The restriction further affected Huawei in continuing the transaction with US software or technology in developing Huawei’s hardware. Huawei also hopes the sale could bring an infusion of cash to Honor itself. Unfortunately, it seems that the US sanction horror might still haunt Honor even after cutting its tie with Huawei.
Analysts still worry about Honor’s future
Kiranjeet Kaur, a Singapore-based senior research manager at IDC’s Asia Pacific client devices group voiced that the ownership shift of Honor from Huawei has its pros and cons. The strategy sure might be effective in helping Honor acquire the needed supplies for business. However, Honor might still find a difficulty to detach from the “synergy” that Huawei has built.
As noted from Forbes, Kaur mentioned that he is “not sure how Honor is going to differentiate in the market from Huawei.” Kaur further added that the consortium might not help much to get the approval from the US due to the state influence.
Alexander Sirakov, an independent Chinese financial technology analyst also voiced a similar opinion. “The fact that there is no strategic investor behind the deal, but rather a consortium of players, many of which are related to the government, sheds light on some of the deal rationale,” Forbes quoted.