Source | SourceSight

On February 18, Huawei unveiled the Mate XT Extraordinary Master in Kuala Lumpur, Malaysia.

Screenshot from X

The Mate XT Extraordinary Master, the world's first triple-folding screen phone, carries a starting price of $3,660, which is enough to deter most potential consumers. However, the significance of this phone goes beyond sales figures.

At the launch event, Huawei indirectly proclaimed its intention to "make a comeback internationally." This statement, made in front of Western media, may seem somewhat tragic and even Don Quixote-like in its romanticism. After all, it has only been a few short years since Huawei's overseas mobile phone business suffered a significant blow.

When sanctions hit, GMS services were removed, and Huawei's market share in Europe collapsed almost instantly. Once considered the "third pole" of the global mobile phone market, Huawei's overseas business found itself in an unprecedented winter.

Pessimistic views gained traction, and the assertion that "Huawei's overseas mobile phone business is dead" became nearly a consensus in the industry.

However, this launch event in Kuala Lumpur was like a silent starting gun. Huawei's actions clearly indicate a strategic intention: even in adversity, it must strive to maintain the spark of its overseas business and use innovative products to regain lost market share.

01

Disappearing Share

To discuss the current status of Huawei's overseas mobile phone business, it is essential to abandon the simplistic perception that "Huawei mobile phones have disappeared from the overseas market."

Admittedly, the impact of sanctions has been devastating, especially in the European market. However, focusing solely on the European market and concluding that "Huawei's overseas business is destroyed" would be one-sided and premature.

Looking at emerging markets, a different picture emerges. In Southeast Asia, Latin America, the Middle East, and Africa, Huawei mobile phones are still visible. Although Huawei's market share has declined in these regions, the drop is far less severe than in the European market.

Even more noteworthy is Huawei's position in the high-end market. Despite an overall decline in market share, Huawei has not abandoned its stance in the high-end segment. Flagship models such as the Mate series and P series are still sold overseas and have a loyal user base. While sales cannot compare to pre-sanction levels, the continued presence of the Mate and P series maintains Huawei's brand image in the overseas high-end market and preserves the potential for future counterattacks.

Strategy Analytics analyst Wu Yiwen once noted: "High-end is an inevitable choice for Huawei. In a situation where sales growth is challenging, maintaining overseas operations and building strength for future counterattacks through high-priced, high-profit products is a more pragmatic approach."

The launch of the Mate XT Extraordinary Master is another attempt by Huawei to make a breakthrough in the high-end market. This "super flagship" product embodies Huawei's strategic intention to reshape its overseas brand image and reignite the enthusiasm of high-end users.

Huawei Mate Extraordinary Master product image | Source from Huawei Mall

Therefore, describing Huawei's overseas mobile phone business as "destroyed" is inaccurate. A more precise description would be "structural contraction and strategic adjustment." Huawei has voluntarily abandoned part of the low-end market, concentrating resources on emerging markets and high-end markets for differentiated competition and brand reshaping. This is a strategy of "retreating to advance" and the optimal choice Huawei can make under extremely adverse external conditions.

02

Tickets to the "Extraordinary Master" Ship

Faced with the overseas market dilemma, Huawei has not been idle. The launch of the Mate XT is a concentrated manifestation of Huawei's series of active response strategies.

If Huawei's overseas strategy is compared to a card game, then the Mate XT is the "ticket" Huawei is trying to use to re-enter the game. This "ticket" is expensive and fraught with risks.

Choosing Malaysia for the "first launch" was a strategic move by Huawei, aimed at "saving the nation by indirect means." The Southeast Asian market has always been a crucial part of Huawei's overseas business. Compared to mature markets like Europe and America, the Southeast Asian market is more price-sensitive but also has more growth potential. More importantly, the Southeast Asian market is relatively less directly affected by US sanctions, and Huawei's brand recognition and channel foundation in the region are relatively strong.

Selecting Malaysia as the global launch site for the Mate XT, rather than Europe or North America, was clearly well-thought-out. From a geopolitical perspective, Malaysia has close economic and trade relations with China and a high acceptance of Chinese brands. Launching in Malaysia can be seen as Huawei building strength in a relatively "friendly" market environment and accumulating experience and confidence for subsequent expansion into a wider overseas market.

As one of the technology hubs in Southeast Asia, Malaysia also has a certain radiation effect. The launch of the Mate XT in Malaysia can attract the attention of neighboring countries and regions, laying the foundation for Huawei's promotion throughout the Southeast Asian market.

The "Extraordinary Master" series is a top-tier flagship product line that Huawei has focused on building in recent years, benchmarking Apple's "Pro Max" series and Samsung's "Ultra" series. As the latest masterpiece of the "Extraordinary Master" series, the Mate XT not only achieves an innovative breakthrough in triple-folding technology but also pursues excellence in design, materials, craftsmanship, and other aspects, aiming to create a "technological luxury good."

In overseas markets, one of the biggest challenges facing Huawei is the damage to its brand image. The decline in user experience due to the lack of GMS and the negative public opinion stemming from US sanctions have significantly reduced Huawei's brand value among overseas consumers. The launch of the "Extraordinary Master" series is a crucial measure by Huawei to reshape its brand image and enhance its brand premium capabilities through high-end products. The starting price of the Mate XT, which is as high as $3,660, also clearly conveys Huawei's strategic intention: abandon the low-end market and go all-in on the high-end market.

The innovative "triple-folding" path is Huawei's strategy to break free from homogenized competition. The smartphone market has long entered the era of stock competition, and homogenized competition is becoming increasingly fierce. Innovation has become the key to brand breakthrough. The Mate XT's triple-folding design is undoubtedly a bold attempt by Huawei in product innovation.

Canalys analyst Jia Mo believes: "HarmonyOS and HMS are Huawei's long-term strategies. Although it is difficult to completely replace GMS in the short term, with the continuous improvement of the ecosystem, HarmonyOS is expected to become a key weapon for Huawei to break through in overseas markets." Although overseas models still use the AOSP system, HarmonyOS NEXT has completed 75% native adaptation of the top 300 applications in Europe.

To some extent, the Mate XT can also be seen as a "pioneer test" of Huawei's HMS ecosystem in overseas markets. If the Mate XT can gain a foothold in the overseas high-end market, it will undoubtedly open up new possibilities for the overseas expansion of the HMS ecosystem.

03

Huawei's "Impossible Triangle"

Huawei still faces a daunting "impossible triangle" – high-end brand, lack of GMS, and overseas expansion. These three factors present irreconcilable contradictions and constraints, testing Huawei's strategic wisdom and execution capabilities.

High-end brand VS lack of GMS. If Huawei wants to maintain its high-end brand image, it must continue to launch top-tier flagship models like the Mate Extraordinary Master, maintaining technological leadership and innovation capabilities. However, high-end flagship models are precisely the areas most affected by the lack of GMS. High-end users, especially those in developed countries in Europe and America, have a high degree of dependence on the GMS ecosystem and have formed usage habits. Without GMS, their experience is greatly compromised.

Although Huawei has made significant progress in building the HMS ecosystem and established a relatively complete application ecosystem in some regions, the attractiveness of the HMS ecosystem is still inferior to the mature GMS ecosystem on a global scale. Especially for commonly used overseas applications such as social media, map navigation, and lifestyle services, the experience in the HMS ecosystem may not be as smooth and convenient as in the GMS ecosystem.

Lack of GMS VS overseas expansion. The absence of GMS not only affects the sales of high-end models but also directly hinders Huawei's overseas expansion of mobile phones. In developed countries in Europe and America, GMS is almost a "standard configuration" for smartphones. Without GMS, it means Huawei cannot enter the mainstream market and can only sell in niche markets or through specific channels. This greatly limits Huawei's mobile phone sales and market share and also impacts the further enhancement of its brand influence.

Even in emerging markets, the influence of GMS is gradually increasing. More and more users are starting to come into contact with and get used to using GMS applications, especially among younger users where GMS has become a "trend" and "standard configuration." This means that even in emerging markets, the lack of GMS will pose a potential obstacle to the sales of Huawei mobile phones.

Overseas expansion VS high-end brand. If Huawei chooses to sacrifice its high-end brand image in pursuit of overseas expansion and launches some "low-price, low-configuration" products, it would undoubtedly be a quick but short-sighted fix. The high-end brand is one of Huawei's core competitiveness. It is precisely with the help of the high-end brand image that Huawei can stand out in fierce market competition, obtain higher profit margins, and support its continuous R&D investment and technological innovation.

If Huawei gives up its high-end brand, its mobile phones may degenerate into "mediocre ones," losing their unique competitive advantage and eventually sinking completely in overseas markets. This is obviously not a scenario Huawei wants to see. Therefore, finding a balance between overseas expansion and the high-end brand is a problem Huawei must seriously consider and solve.

Huawei must navigate the delicate balance between the "high-end brand," "lack of GMS," and "overseas expansion." This balance point is not static and requires Huawei to continuously adjust and optimize it based on market changes and its own situation. This is a dynamic process of strategic gameplay and will determine the future direction of Huawei's overseas mobile phone business.

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