The smartphone brand that Huawei sold off regains market share in China

September 30, 2021: -Honor, the smartphone brand Huawei spun off last year, is beginning to regain share in China’s fiercely competitive mobile phone market.

On Wednesday, honor regain 15% market share in China, making it the third-largest smartphone player in the country, the first time it has held that position in a year, Counterpoint Research said in a report.

The smartphone company trails domestic rivals Oppo and Vivo. Sales of Honor devices increased 18% in August compared to July, making it one of the fastest-growing brands in China.

In November, Huawei sold its budget brand Honor to a consortium of buyers, including the Shenzhen government, where the headquarters is located.

Huawei ensured Honor survived because U.S. sanctions on the Chinese technology giant cut off supplies to critical components and crippled its smartphone business, including Honor. Selling it off allowed Honor to get access to essential features such as semiconductors again.

“After being spun off from Huawei, Honor restored ties with component players,” Tarun Pathak, research director at Counterpoint Research, said. “Since then, leveraging its strong R&D [research and development] capabilities, Honor also launched new products and has been on a rapid recovery path in China.”

In January, Honor launched a mid-range phone known as the V40, followed by the Honor 50 in June. This month, it launched the higher-end Honor 3 series of smartphones launched in China and other global markets, including Europe.

“Honor targets the premium segment with the Magic series, thus expanding its portfolio across price bands,” Pathak said.

“There was also a pent-up demand from the loyal Huawei and Honor consumers who held on to their devices and did not switch to other brands. Its relationships with distributors helped Honor relaunch products on a large scale. Honor’s resurrection will further intensify competition in the Chinese market in H2 2021,” Pathak said.

Honor targets global markets, but success there might be harder to find. Its global market share reached 3.7% in August, up from 1.5% in February, but that is mainly because of the gains in China, Neil Shah, research director at Counterpoint Research, told CNBC.

In international markets, Honor is about to face stiff competition from Apple and Samsung and China’s Xiaomi, which has continued to steal the market share lost by Huawei.