Should Huawei's automotive business be TO B or TO C? A struggle between Yu Chengdong and Ren Zhengfei is unfolding.
In the "Resolution on the Management of Intelligent Auto Parts Business" issued by Ren Zhengfei within Huawei in 2020, it has always been emphasized that "Huawei will never build cars, but help car companies build good cars." This sentence was even emphasized in a bold manner.
At that time, many automakers were originally willing to cooperate with Huawei, and Huawei's supply technology was very good, and it could become a parts giant like Bosch, BorgWarner, and Aisin.
But Yu Chengdong does not think so, as we all know, Huawei's mobile phone business is blocked, data show that in the first three quarters of last year, Huawei's global shipments of mobile phones were about 30 million, down 70% year-on-year. Affected by this, Huawei's revenue last year was 634 billion yuan, down 257.4 billion yuan from the previous year. The equivalent of a decline in the mobile phone business has caused Huawei a loss of more than 30%.
The retail channel has no mobile phone to sell, facing a comprehensive shrinkage of the channel. Therefore, Yu Chengdong hopes that Huawei's automotive business can feed back the mobile phone channel, and in the absence of mobile phones, let the channel sell cars to support, waiting for the end of sanctions, and the mobile phone business can quickly make a comeback.
Intertwined with this complex reason, Yu Chengdong did not invest a lot of energy to develop and do the supplier business of automobile manufacturers.
Huawei has repeatedly wanted to go to the front desk and show its own brand, which is unacceptable to OEMs, especially leading OEMs.
Large OEMs all want to show their R&D technical capabilities, so bosch and other parts giants have invested a lot of R& D investment, but they have been very low-key.
Huawei is also developed by doing TO B business, and the direct TO B business is also a big head of income, service capabilities, and attitudes are well-known in the industry, and it is willing to be a hero behind the scenes, and everything is customer-centric. But to C business is another logic, the need for high profile, strong communication, etc., is completely the opposite of TO B business, the characteristics of success in TO C business, but in TO B is very unusable. Including SAIC, many large manufacturers have had good cooperation with HUAWEI CLOUD and other business units, and they also have good expectations for the bus business BU business.
However, after Yu used the TO C business style to lead the smart car BU, it was very strong, not very good at TO B, and the car companies were also on the top, more education and guidance, no service mentality, resulting in a very mainstream large main engine factory, although it knew Huawei's strength, it was not willing to cooperate with Huawei, and many main engine factories were very resistant to Huawei's automobile business.
Yu Chengdong once revealed in an exposed video of Huawei's internal speech that Huawei has invested more than $1 billion in the field of auto parts and has a research and development team of more than 5,000 people. The cooperative company can't sell many cars and the business can't do it, so he continues to vigorously carry out the retail business of the new brand to ask the world.
This makes the main engine factory and Huawei hand in hand into their own research and development capabilities, everything depends on Huawei's bad impression. Whoever cooperates with Huawei in depth will take the initiative to admit that his research and development capabilities are not successful.
Emphasize the new forces created by technology, Weilai, Ideal, Xiaopeng, Chinese use, lead, etc., without exception, without mentioning Huawei.
It is to prevent the outside world from determining cooperation with Huawei, and thinking that their own research and development capabilities are not successful.
For example, BMW, starting with sports, has no ability to do transmissions, and has been using ZF, but ZF takes the initiative to emphasize how good he is.
Whether Huawei's toC business can rise is still a question mark, but the TO B business has obviously failed. How will this struggle between Yu Chengdong and Ren Zhengfei end in the end? We'll see what happens.
01 Free between 2B and 2C
At the end of January this year, a Polar Fox Alpha S Huawei HI edition stopped in the first Huawei new concept flagship store in Beijing Yintai. Next to it is a recent debut of the Q&E M5.
Two cars of different brands are located in a third-party brand showroom for the first time. Because of Huawei, it is reasonable to make all this exist.
Careful consumers have found that although only from the outside, the two products have no strong association with Huawei, but compared with the inconspicuous "HI" logo on the body of the Polar Fox Alpha S Huawei HI version, several "HUAWEI" words in the interior of the M5 seem to have a stronger hint: I am the one who is more "Huawei".
This hint is further highlighted by the sales pitch.
When consumers asked about the difference between the two cars, they were told that the Polar Fox Alpha S Huawei HI version has not yet been officially listed (delivery has been postponed), and the Inquisitive M5 will be officially delivered on March 5, and in addition to the engine, the design, electric drive system, sensing hardware, intelligent driving, intelligent cockpit, and even vehicle tuning and NVH polishing of the Q&I M5 are all handled by Huawei.
It almost did not directly say that the Q&I M5 was made by Huawei.
This attitude of differentiation is not at all surprising.
On the one hand, Huawei injected more resources and painstaking efforts into the M5, on the other hand, Yu Chengdong grasped the brand consumption psychology of C-end users. Based on Huawei's strong brand aura, Huawei sales staff is bound to semi-disclose the Huawei gene of the Q&I M5.
Q&I M5 did not hang the "HUAWEI" logo, and Huawei believes that it has fulfilled its promise of "not building cars" well. However, car companies smell danger from Huawei's frantic temptation on the edge of "car building".
02 Playing two roles at the same time, neither can Huawei
For a long time, the business field has developed an unwritten rule: a manufacturing company cannot play the roles of both a supplier and a consumer enterprise.
There are probably many examples to refute this view.
For example, Samsung is one of the world's leading mobile phone SOC manufacturers and a global mobile phone giant.
But please note that since Samsung's share of the Chinese mobile phone market is almost negligible, mainstream domestic mobile phone brands have gradually purchased Samsung SOCs. Even so, Qualcomm and MediaTek still dominate the supply chain, because in overseas markets, Samsung mobile phones are still very powerful.
In other words, if a company wants to be both a supplier and make money in the consumer market, at least you have to give up a large piece of market cake. Similar situations are more pronounced in the automotive industry.
BYD is China's earliest company involved in the battery industry, and it also predates car manufacturing. However, the first-mover advantage may not work.
According to the 2021 global power battery installed capacity ranking, CATL ranked first for 5 consecutive years with a market share of 32.6%. BYD's share is only 8.8%.
Why can the Ningde era be the last to catch up? Quite simply, because BYD has built cars, and new energy vehicles are selling more and more. The Ningde era is self-contained and single-mindedly provides power batteries for car companies.
In fact, the concern of car companies is not only to fight with Huawei cars in the C-end market, but also to be afraid that once the "soul" is handed over to Huawei, it will one day be stuck in the supply chain by the other party.
Not to mention that these two years have been so magical, and many seemingly impossible plots have been staged repeatedly. Even if in the past everyone followed the laws of international business, it is difficult to guarantee that under the pressure of the existential crisis and the huge trend of interests, who will throw the table.
Therefore, now car companies have learned that eggs are not in one basket, and the same is true for cooperation with Huawei.
Changan and Huawei jointly built Avita, but they did not give up Changan New Energy, and the same is true for Jihu. Great Wall, SAIC, FAW and other companies have carried out selective cooperation with Huawei, opening only one functional domain of the product to each other to avoid completely losing the "soul".
03 Unable to take care of this, he lost the other
The increasing vigilance of car companies has made the development of Huawei's B-end automobile business tend to be flattened. Since establishing in-depth cooperative relations with BAIC, Changan, and GAC and comprehensively introducing "HI" solutions, Huawei has not found the next partner.
On the other hand, the C-end business that Yu Chengdong has fully promoted has not been smooth.
I vaguely remember that last year, two days after the listing of the Xilis Huawei Smart SF5, the official released the official poster that received 3,000 orders, and a Huawei aura was irresistible. Who knows, in 2021, with the help of Huawei's offline channels, the annual sales of the car will only be more than 8,000.
After the M5 was scheduled, Huawei claimed to receive 6,000 orders in 5 days, but with the lessons of the past, it is inevitable that people will have doubts about Huawei's ability to carry goods.
A video of Yu Chengdong's speech inside Huawei, which was previously exposed, showed the real trend of Huawei's automotive business development under Yu Chengdong's leadership.
In the video, Yu Chengdong said that he plans to use 1,000 stores to sell cars in 2022, assuming that each store can sell 30 cars per month, and Huawei's annual sales of cars can exceed 300,000. At the same time, he also listed the new power car companies, Tesla and BBA as imaginary enemies.
Leaving aside whether this sales target can be achieved for the time being, after watching the video, car companies will definitely have a grudge against Huawei, and even become hostile.
This result is clearly contrary to Huawei's original intention.
04 It's time to make a trade-off
According to the current undesirable situation at both ends, Huawei is bound to make a trade-off between the two business lines of the B-end and the C-end.
The automotive supply chain market is huge and can fully satisfy Huawei's appetite. According to Bosch's 2021 financial report, its automotive division has annual revenues of 45.4 billion euros, which is almost equivalent to Huawei's consumer business.
Huawei also started from the B-end business of communication equipment, has rich experience in this field, and has laid the "customer-centric" service concept.
If Huawei is satisfied with the role of supplier, it can not only smooth the transition, but also hope to become a strong endorsement of car companies' products, and will also become a strong challenger to supply chain giants such as Bosch and Continental.
But Yu Chengdong seems to have cut off this wonderful path of development.
If it continues to continue its current development strategy, in the long run, Huawei's automotive B-end business is likely to completely hit the wall. At that time, the pressure will completely shift to Yu Chengdong's C-end business. For a star enterprise like Huawei, it is not advisable to tie success or failure to one person.
Therefore, Huawei and Ren Zhengfei should rethink: Is it wrong to choose Yu Chengdong to make cars?