Text | Cao Shuangtao
Edit | Yang Bocheng
Title Picture | Photo by DoNews
Shanxi Yuncheng M7 incident, net profit soared by more than 5 times, and high-level personnel changes, Huawei has recently frequently topped the hot search.
On April 30, Huawei announced its 2024 Q1 financial report, which showed that Huawei's revenue increased by about 36.66% year-on-year to 178.45 billion yuan, and the net profit attributable to the parent company increased by about 564% year-on-year to 19.65 billion yuan, once again demonstrating Huawei's stable operating ability.
On the same day, Huawei also released a personnel adjustment document, Yu Chengdong will step down as CEO of Huawei Device BG, and will still retain the position of Chairman of the Device BG. He Gang, the former chief operating officer of Huawei's device BG, took over as the CEO of Huawei's device BG, and Huawei has confirmed the truth of the incident.
In response to Yu Chengdong's follow-up direction, a person familiar with the matter revealed that this adjustment is a regular non-major adjustment, and Yu Chengdong may focus more on Huawei's automotive business after the adjustment.
However, some people familiar with the matter revealed that the adjustment has actually been confirmed before, and Yu Chengdong will be responsible for Huawei's 5.5G business in the future. However, regarding Yu Chengdong's new movements after leaving office, Huawei has not disclosed it to the public for the time being.
What is the purpose of Huawei's high-level personnel adjustment? Can Yu Chengdong build Hongmeng Smart Selection into the next "Huawei mobile phone"?
01. Yu Chengdong once led the transformation of Huawei's smartphones
Since joining Huawei in 1993, Yu Chengdong has served as Director of 3G Products, Vice President of Wireless Product Marketing, President of Wireless Product Line, and President of the European Region. After Yu Chengdong returned to China in 2010, he was responsible for President of Strategy and Marketing of Huawei.
In 2011, after Yu Chengdong took charge of Huawei's terminal and consumer business, he not only led Huawei mobile phones into the camp of China Cool Alliance, but also became the only remaining player in the era of China Cool Alliance.
From 2011 to 2013, in order to increase the penetration rate of 3G and 4G networks, operators gave high subsidies to China Cool Union manufacturers. Although this has led to the continuous growth of China Coolpad's sales, it has made China Coollink overly dependent on operators. Operators accounted for 90%, 100% and 88% of ZTE, Lenovo and Coolpad mobile phone shipments respectively
In 2014, the policy of "replacing business tax with value-added tax" continued to advance, and the subsidies of operators were reduced. E-commerce platforms represented by JD.com and Taobao have risen rapidly, and domestic smartphone shipment channels have ushered in great changes. While this is impacting the smartphone businesses of Coolpad, Lenovo and ZTE, the internal executive team continues to shake.
Lenovo's smartphone business gradually dimmed after four managers from 2014 to 2018. Coolpad has successively clashed in cooperation with 360, the second largest shareholder Jia Yueting LeTV broke out in crisis, and Coolpad founder Guo Deying resigned and suffered a heavy blow.
Southern Weekly has pointed out that ZTE's management has actually formed an internal and hidden profit distribution system, and low-level employees are basically excluded from the established interest pattern. When this restricts the innovation and breakthrough of ZTE's smart phone product design, Yin Yimin, Cheng Lixin, and Zeng Xuezhong, who is known as "Zeng Yibillion" and "Eight King Kongs" within ZTE, have resigned successively, and ZTE mobile phones have gradually declined.
Unlike Coolpad, Lenovo, and ZTE, after Yu Chengdong took office, he not only cut Huawei's white-label operator custom machine business with an annual sales of 30 million, but also focused on smart phones. In addition, it has successively made major adjustments such as abandoning the low-end mobile phone market and opening the road to e-commerce, and formulated four major product lines of the Ascend series, including D, P, G, and Y series, of which the P series and D series focus on high-end flagships.
Source: Weibo
Although 14 of the 15 operators in Europe terminated their cooperation with Huawei, the Ascend P1 sold 500,000 units in 2012 and sold more than 4 million units in June 2013.
Because each executive has a very different understanding of the market, product positioning, and user insight, for example, some of the four executives who have experienced Lenovo smartphones want to play high-end, some want to play cost-effective, and some want to capture young people. However, Yang Yuanqing left each executive a very short time for trial and error, and if it didn't work, he would be replaced, which not only brought about the resignation of executives and the increase of negative emotions among employees, but also made it difficult to establish brand mental barriers in the hearts of consumers. Under the high-level changes, Coolpad, Lenovo, and ZTE have gradually become the existence of smartphones.
Yu Chengdong has been leading Huawei's smartphones for 13 years, and under the guidance of clear strategic goals, Huawei smartphones have also completed the transformation from low-end to high-end.
This includes sales of Huawei's Mate7 equipped with the self-developed Kirin 925 processor in September 2014, which exceeded 7 million units, and in 2016, the P9 Plus, eight months after its launch, sold more than 10 million units worldwide. This is also Huawei's first high-end flagship smartphone with shipments exceeding 10 million, and the P series and Mate series have also established Huawei's position in the high-end mobile phone market.
In order to continue to increase its market share of high-end mobile phones in China and around the world, Huawei has increased R&D investment, invited celebrity endorsements and dealer interests, and increased investment in overseas markets. However, after Huawei was sanctioned in the United States in 2019, Huawei's smartphone business also ushered in a dark moment. Ren Zhengfei shouted even more, and passed the chill to everyone.
图源:Statista
In August 2023, Huawei is ushering in a strong comeback after the "sneak attack" release of the Mate 60. According to the latest report from Counterpoint Research, Apple's sales in the Chinese market will decrease by 19.1% year-on-year in Q1 2024, while Huawei's sales will increase by 63.7% year-on-year. Huawei's smartphone market share has increased to 15.5% from 9.3% in the same period in 2023. During the same period, Apple's market share fell from 19.7% to 15.7%, only 0.2% ahead of Huawei.
图源:digitimes
But Huawei's smartphones face some real-world challenges if they want to return to the moment of disruption. According to Counterpoint Research data, in Q4 2023, Huawei's Harmony OS will have a global market share of 4% and a domestic market share of 16%, making it the third largest mobile phone operating system.
However, Xu Zhijun, Huawei's rotating chairman, said at the Huawei Analyst Conference that building a Harmony OS native application ecosystem is the most critical thing for Huawei in 2024.
Only after all 5,000 apps built on Harmony OS are launched, the Harmony OS system can be considered complete, and it can truly be the third largest operating system in the world. At the same time, the United States will continue to curb domestic technological development, and will continue to escalate.
However, considering that the current global mobile phone market competition pattern is relatively stable, the market share is in the hands of several mainstream manufacturers, and Huawei's share in high-end mobile phones is still in the leading position, Huawei's mobile phone sales may continue to grow in the future.
According to TechInsights, a Canadian research institution, China's mobile phone shipments will exceed 50 million units in 2024, of which Huawei's Pura 70 series is expected to reach 10 million units, driving Huawei to regain the leading position in China's mobile phone market with a market share of 19%, surpassing the 12% market share in 2023.
02. New energy vehicles developed in the direction of "consumer electronics".
Unlike Huawei's smartphone business, Huawei's automotive business needs to face a fiercely competitive market, and intelligent driving will become the direction of competition for new energy vehicle companies in the future.
According to the "Intelligent Connected Vehicle Technology Roadmap 2.0" released by China's National Intelligent Connected Vehicle Innovation Center, it is expected that by 2025, the sales of L2-L3 intelligent networked vehicles will account for more than 50% of the total sales, and the commercial application of L4 vehicles will be realized in specific scenarios. By 2030, L2-L3 vehicles are expected to account for more than 70% of sales, and L4 vehicles will be widely used on highways and some urban roads.
According to the analysis of Founder Securities, with the continuous launch of a number of new models of leading intelligent brands, the penetration rate of high-end intelligent assisted driving will increase rapidly, and it is expected that high-end intelligent assisted driving is expected to usher in an inflection point in 2024.
This may also be an important reason why Musk visited China in the hope that China will open the door to Tesla's FSD, and thus save Tesla's declining sales and stock price.
At a deeper level, the current development direction of new energy vehicles towards intelligent driving is essentially the same as that of the smartphone industry back then. That is, through the Internet, intelligence to complete the education and penetration of users, and then through the price war to seize market share, to complete the big waves, industry reshuffle, and finally through high-end intelligence to pull back the premium, to achieve stable profits.
Based on this, we can not only see the increasingly fierce price war in the new energy automobile industry since 2023, but also see Lei Jun teaching Nezha Automobile online marketing for Xiaomi SU7 and Hongyi himself. I can also see Chery, Great Wall and other car circle bigwigs live broadcast one after another, and Lei Jun and Zhou Hongyi became the top performers at the Beijing Auto Show.
From the follow-up point of view, considering the rapid technological iteration and update of consumer electronics, the rapid introduction of products to the market, and the diversification of consumer choices, new energy vehicle manufacturers need more traffic and online marketing capabilities, and the "consumer electronics" attribute of new energy intelligent driving is becoming more and more obvious.
This does not explain why Yu Chengdong will be appointed as the chairman of Huawei's car BU department after the independence of Huawei's car BU department, and the market rumors that Yu Chengdong will be mainly responsible for Huawei cars in the future.
After all, the thirteen years of Huawei's smart phones led by Yu Chengdong are the thirteen years of real great changes in domestic smart phones from technology to products, from channels to markets, and Yu Chengdong is also a real participant and leader under this great change.
For Huawei's BU business, the urgent need to solve the problem is profitability. Yu Chengdong pointed out at this year's China Electric Vehicle 100 Forum that Huawei's car BU lost 10 billion yuan in the previous year, then lost 8 billion yuan, and lost 6 billion yuan last year. In other words, in the past, Sanhua's car BU business has lost more than 20 billion yuan.
Source: China Electric Vehicle 100 Forum (2024)
Although Yu Chengdong also pointed out that in the first three months of this year, the smart car has turned a profit, and the car BU is currently close to the edge of a turnaround, and it is expected to achieve a benign positive development from April, and it is expected to turn losses into profits this year.
However, if it wants to ensure that profits continue to grow, Huawei must also attract more car companies to join, just as NIO continues to expand its charging alliance. This is precisely the support that Huawei has given to the community, hoping to build this "pro-son" into a model of cooperation.
Relying on the hot sales of the new M7 and M9 in the first quarter of this year, Thalys's revenue and profit both increased. According to the financial report, this year's Q1 Thalys revenue increased by 421% year-on-year to 26.561 billion yuan, the net profit attributable to the parent company increased by 135.12% year-on-year to 220 million yuan, and the gross profit margin increased to 21.5%.
Source: Baidu
In addition to Wenjie, Huawei's car BU department also cooperates with Zhijie, Xiangjie, and the million-level car launched in cooperation with JAC. Behind the increasing number of "sons" is the slowdown in the growth rate of the new energy vehicle industry and the limited resources of Huawei.
How to balance the interests of the "sons" poses higher challenges to Huawei's channel resource integration capabilities, technical capabilities, and interest control capabilities, which may also be the deep-seated reason why Huawei adjusts personnel and hopes that Yu Chengdong will be in the position.
03. Can Hongmeng Zhixing become the next "Huawei mobile phone"?
has been deeply involved in the smartphone industry for many years, so that Yu Chengdong and Lei Jun are extremely sensitive to content dissemination. This high sensitivity also brings high traffic and attention to Wenjie, which eventually translates into high sales of Wenjie.
But this high sensitivity can also push a brand to the forefront of public opinion at any time and cause market controversy. For example, when Yu Chengdong is marketing to Wenjie, he often uses extremely exaggerated words - the best SUV within 10 million, the best AEB among all cars, and AITO Wenjie's car, there is no problem of being burned, and many cars are burning every day, far ahead, etc.
In addition to high-profile publicity to the outside world, Yu Chengdong has frequently promoted Huawei's intelligent driving capabilities. For example, the AEB capability is a small case for Huawei, and Huawei's GOD (General Obstacle Detection Capability) far exceeds the capabilities of ordinary AEB.
On the third day of the Lunar New Year this year, Yu Chengdong posted in the circle of friends that the NCA pilot intelligent driving of the world has basically reached the L3 level at high speeds, and it can be considered to allow users to let go of the regulatory requirements of always holding the steering wheel, and complained that the current regulations lag behind the development of technology.
Source: Yu Chengdong's circle of friends
This inappropriate remark quickly aroused the dissatisfaction of netizens and relevant people in the industry, after all, L3 intelligent driving involves the identification of traffic accidents, the adjustment of traffic lights, whether the insurance company is willing to bear the claim, and whether the L3 level of automatic driving can ensure absolute safety during driving.
And according to netizens' actual measurements of Huawei NCA Pilot Intelligent Driving, Huawei NCA Pilot Intelligent Driving also has situations such as the inability to identify the surrounding small tree branches as opposite-sex obstacles, as well as the large traffic flow on the right side of the elevated highway, and the long solid line cannot get off the ramp due to the late lane change.
Source: Weibo
In the recent M7 accident in Shanxi, Wenjie said that the model was the entry-level version of Wenjie rather than the intelligent driving version, and was not equipped with Huawei's high-end intelligent driving assistance system, but used the Bosch solution, which has a working range of 4-85km/h, and the speed of 115km/h at the time of collision has far exceeded the trigger range of Bosch AEB. However, Bosch responded that the accident vehicle was not equipped with the Bosch intelligent driving system (including AEB), and was slapped in the face.
Source: Bosch announcement
The general direction of new energy intelligent driving is to develop in the direction of "consumer electronics" represented by smart phones, but traditional fuel vehicles, new energy vehicles, and intelligent driving vehicles ensure the absolute safety of drivers and passengers is the basis of vehicles, which is absolutely different from consumer electronics.
Considering that domestic consumers already have a high level of trust in Huawei technology, Yu Chengdong's propaganda for various "circles" and Huawei's intelligent driving should be quite rigorous, rather than deliberately exaggerating propaganda for the sake of sales, otherwise it will easily mislead the public.
Based on this, if Yu Chengdong really continues to be in charge of Huawei's automotive business in the future, he must not completely copy the marketing method of smartphones.
Along with the high-level personnel, there is also the sales commission of Hongmeng Zhixing's first-line stores, and the sales of Hongmeng Zhixing stores revealed that since the new M7 and M9 in the world have been selling well, Hongmeng Zhixing's commission for selling single cars in stores has dropped again and again. Taking the new M5 priced at 249,800 yuan as an example, after the customer successfully places an order and completes the delivery, the commission for a single vehicle is about 300 yuan.
However, from booking a customer test drive to customer tracking to final delivery, the time and energy spent by front-line sales is extremely high, which makes the sales momentum of many Hongmeng Zhixing stores not strong. In the long run, it may affect the growth of sales of Wenjie and other "circles".
Epilogue:
The more ruthless the peers and the evaluation agency, the more stable the personality. is on the hot search at every turn, and the golden sentences are exploded twice in three days, and Yu Chengdong also stabilizes the traffic in the car circle. It's just that more and more car companies like Yu Chengdong have been rolling up traffic and frantically promoting intelligent driving, which will really be a good thing for the long-term development of domestic new energy vehicles? This may also be a question that Huawei really needs to think about.