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Huawei posts 0.4 percent profit growth in 2016

HUAWEI Technologies Co posted only 0.4 percent net profit growth in 2016 because of fiercer competition in smartphone business and more spending in research and development, the China’s biggest telecommunications device vendor said today.

Net profit increased 0.4 percent to 37.1 billion yuan (US$5.4 billion) in 2016, its slowest pace of growth in the recent five years. Its net margin dipped to 7.1 percent from 9.3 percent the previous year.

The revenue jumped 32 percent to hit 521.6 billion yuan, thanks to growing business for selling equipment and offering IT services to mobile carriers and enterprises in addition to retail smartphone business.

In 2016, Huawei sold 139 million smartphones globally with a revenue of 179.8 billion yuan, a 44 percent growth from a year ago.

Huawei, as one of the China’s most recognized consumer brands, has grabbed market shares from Samsung and Apple in the high-end markets with huge investment on marketing an brand-building. It is considered the third largest in the global smartphone market, catching up with Apple and Samsung quickly, analysts said.

Huawei spent 76.4 billion yuan on research and development in 2016, the first time for it to surpass the US$10-billion line, covering technologies from artificial intelligence, wireless technology to cloud computing.

It’s necessary for Huawei to spend more on research in the future as the 5G or next-generation mobile communications will start commercial use in 2018. On the other hand, Huawei has to compete with strong domestic rivals like Oppo in the smartphone segment, analysts said.

Digitial transformation covering cloud, video, Internet of Things and 5G are strategic opportunities for Huawei in the future, said Eric Xu, rotating chief executive of Huawei.


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