In recent news, there have been rumors that Huawei (Hammer) might merge with 360 Mobile. However, Lao Luo, the founder of Huawei, has officially denied these claims. Despite this, the reality is that Huawei is in urgent need of new investors to provide much-needed financial support. Considering this, a merger between the two companies is not entirely out of the question. Let’s take a closer look at what’s going on.
Lao Luo has officially denied the rumors about merging with 360, but Huawei’s need for fresh investment is undeniable. The company’s journey into the smartphone market hasn’t been smooth. It wasn’t until the release of the Nut Pro2 last year that the brand started to see some signs of improvement. However, even in 2017, its smartphone shipments were estimated to be around 4 million units. With over five years of operation, Huawei has yet to achieve significant market growth.
Comparing this to Xiaomi, which reached the top four domestic smartphone brands within just three years, Huawei's slow progress is clearly not meeting investor expectations. This has made it difficult to secure funding. The RMB 1 billion from the Chengdu government last year was the largest round of financing Huawei has received so far. In contrast, Xiaomi raised nearly $2 billion from its inception to 2014. Clearly, funding remains a major obstacle for Huawei’s development.
The Chinese smartphone market has also become more challenging. In the fourth quarter of 2017, the market experienced double-digit declines, marking the first such downturn in many years. This economic climate has made it even harder for Huawei to thrive.
With fierce competition, Huawei faces immense pressure. In the fourth quarter of 2017, the top five brands—Huawei, OPPO, vivo, Xiaomi, and Apple—held nearly 80% of the market share. The remaining space is occupied by second-tier players like Jinli and Meizu, making it extremely tough for Huawei to compete.
Given this situation, Huawei urgently needs new investors to support its operations and continue building on the momentum of the Nut Pro2. However, after the issues with LeTV’s smartphones, many investment institutions have become cautious about entering the smartphone industry. Finding new investors is no easy task for Huawei.
360 once had ambitions in the smartphone sector. When Xiaomi emerged, 360 launched a special offer phone, but it didn’t quite work out. Later, they partnered with Coolpad and entered the market directly, but the results were underwhelming. These missteps cost them valuable time and opportunities. As a result, 360 has struggled to establish itself in the smartphone space.
However, 360 has successfully gone public through a backdoor listing and now holds a large amount of cash. Its main focus is on internet services, so merging its hardware division—specifically its smartphone business—with Huawei could be a strategic move for both parties. For Huawei, this would mean access to new financial resources, while for 360, it could be an opportunity to re-enter the smartphone market.
Therefore, even though Lao Luo has denied the merger rumors, the possibility still exists. Huawei may not have full control over its future, as the influence of investors can't be ignored. In many cases, business mergers are driven by investors rather than founders, highlighting the challenges faced by entrepreneurs who accept external capital.
In summary, although Lao Luo has denied the rumors of a merger with 360, the need for new investors remains a pressing issue for Huawei. If you're interested in more updates, make sure to follow eeworld. We will keep you informed with comprehensive and up-to-date information.
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