Chinese networking giant Huawei sells budget-focused Honor smartphone division to consortium of agents and dealers to keep brand alive
Huawei is to sell its budget brand smartphone unit Honor to a consortium of over 30 agents and dealers in a bid to keep it alive, the company and the consortium said on Tuesday.
Huawei confirmed the news in an official announcement, citing the fact that the firm’s “consumer business has been under tremendous pressure as of late.” It added “this has been due to a persistent unavailability of technical elements needed for our mobile phone business.”
It had been reported last week that Huawei was on the verge of selling the smartphone brand because of supply chain restrictions caused by US sanctions. The sale would also allow Huawei to focus on high-end handsets and corporate-oriented business.
Because of the problems caused by the US sanctions, Huawei said that “thus decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co. Ltd.”
“This sale will help Honor’s channel sellers and suppliers make it through this difficult time,” it said. “Once the sale is complete, Huawei will not hold any shares or be involved in any business management or decision-making activities in the new Honor company.”
And the firm made clear that the move was directly to ensure that the Honor brand survived.
“This move has been made by Honor’s industry chain to ensure its own survival,” Huawei said. “Over 30 agents and dealers of the Honor brand first proposed this acquisition.”
“Since its creation in 2013, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range,” it added. “During these past seven years, Honor has developed into a smartphone brand that ships over 70 million units annually.”
“Huawei highly appreciates the continued dedication, attention, and support given by Honor’s consumers, channel sellers, suppliers, partners, and employees.” it concluded. “We hope this new Honor company will embark on a new road of honor with its shareholders, partners, and employees. We look forward to seeing Honor continue to create value for consumers and build a new intelligent world for young people.”
There was no official financial figures provided for the sale of the brand , but last week it was reported that the unit would be sold for approximately $15 billion.
When the deal goes through, one source told Reuters on Tuesday that the US government would have no reason to apply sanctions to Honor after it separates from Huawei.
The Honor brand is sold mostly via its own website and third-party retailers in China, where it competes with Xiaomi, Oppo and Vivo in the lower-priced handset market.
It also sells phones in Southeast Asia and Europe.
It is reported that the consortium that brought the Honor unit includes electronics products and appliance store Suning.com, as well as several state-owned investment firms in Huawei’s hometown of Shenzhen.
Honor will look for more investment partners in the future, with the possibility of an eventual listing, a source told Reuters.
Digital China was not part of the final buyer group, the source said.