Image Source: Honor
Chinese tech giant HONOR has been making waves in the South African smartphone market since its launch almost 2 years ago. The company’s impressive growth as reported by Mybroadband, highlighted by a 600% increase in market share between the start and end of 2023 , has caught the attention of the industry and consumers alike.
Originally a sub-brand of Huawei, HONOR was sold off in 2020 to protect it from the ever increasing US sanctions, trying to limit its access to the latest chip technologies and software ecosystem from the likes of Google. Despite these challenges, the company has managed to establish a strong presence in the global market.
HONOR’s recent announcement of a planned IPO in Shanghai or Shenzhen has further solidified its position as a major player in the Chinese tech industry. The company aims to achieve annual sales of 100 million phones by 2026 and become a top three global vendor by 2028.
However, recent reports by Reuters suggest that HONOR may be receiving “unusually high levels of government support” ahead of its Initial Public Offering ( IPO ).Shenzhen government documents have revealed that the company has been granted significant R&D funding, tax breaks,and support for overseas expansion.
The involvement of a national state-owned enterprise (SOE) like China Mobile in HONOR’s shareholding structure has raised questions about the extent of government influence. While it’s understandable that the Shenzhen city government might want to see success from one of its local companies, China Mobile’s involvement seems less straightforward.
As a major player in the Chinese handset market, China Mobile already has strong relationships with various handset makers. It’s unclear what additional benefits they derive from directly investing in HONOR.
HONOR has defended its collaboration with China Mobile, stating that the partnership aims to leverage “synergistic advantages” in innovation and provide consumers with a better experience.
As reported by Reuters :
“China Mobile’s investment aims to leverage “synergistic advantages” in innovation across personal and home device markets, Honor said in a statement.
“Honor has always adhered to the principle of open and transparent development and will continue to diversify its shareholding structure,” it added.
The collaboration is set to capitalise on Honor’s product portfolio and China Mobile’s channel resources and user base, it said.
“Through this cooperation, both parties will give full play to their respective advantages and jointly provide consumers with a better and more innovative experience.”
