The Honor Magic Vs is on display at Honor’s booth at the Mobile World Congress in Barcelona. The near $1,700 device is Honor’s attempt to challenge Samsung in the foldable smartphone market.

Arjun Kharpal | CNBC

Honor CEO George Zhao has a simple philosophy — make the best products and the sales figures for the Chinese smartphone maker will follow.

In a wide-ranging and rare interview with global media, Zhao addressed the company’s strategy to compete with the likes of Apple and Samsung and hinted at a new foldable phone.

He also shrugged off concerns that Honor, which was spun off from Huawei, could potentially be hit by the same US sanctions that crippled its former parent company’s operations.

Honor takes aim at Apple and Samsung

Honor launched its Magic Vs foldable phone outside of China this week, with a price tag of nearly $1,700. It also took the wraps off the Honor Magic5 Pro, its high-end flagship phone.

Under Huawei, Honor focused on mid-range smartphones. But the company is now looking to exploit the high-end market where Apple and Samsung dominate.

Zhao is aware of the challenges Honor faces in its pursuit and it takes a cautious approach to growth.

“Our ambition (is to) make things better for today … and in the future we have the goal is how to satisfy our customers. And also how we build trust and relationships with our partners. And these two things, (if) we do this healthy, then the growth, the target, the sales number will come to us automatically,” Zhao said.

“If you just aim for higher volume … eventually you’re going to lose it.”

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Honor only launched its first phones outside of China last year after being sold from Huawei in 2020. And it’s a tough time for Honor to jump into the market. By 2022, smartphone shipments will fall to theirs lowest level since 2013. But high-end smartphones, those costing over $800, accounted for 18% of the total phone market in 2022, up from 11% in 2020, Canalys data shows.

That’s why Honor is chasing this category. But Honor still lags behind Apple and Samsung.

The company’s worldwide market share stood at 4.6% in 2022, compared with 21.2% for Samsung and 18.3% for Apple, according to data from Counterpoint Research.

More folding forward

At the Mobile World Congress in Barcelona this week, Honor had a huge booth showcasing its latest wares, underscoring its ambition to be a global player. It was right next to Samsung’s exhibit, highlighting its desire to be seen in the same vein as the South Korean giant.

Honor had a large poster for Magic Vs with the slogan: “Unfold your magic.”

Honor presented a large stand at the Mobile World Congress in Barcelona, ​​the world’s largest mobile trade fair. The company showcased its latest flagship devices including the Magic Vs.

Arjun Kharpal | CNBC

The foldable was the star of Honor’s show. Foldable devices were pioneered by Samsung, which released its first smartphone of this kind in 2019. Other companies, mainly Chinese, have followed suit. And they are now starting to release them on the global stage. These smartphones have a bendable screen.

Oppo launched its Find N2 Flip last month while the CEO of Lenovo, which owns Motorola, told CNBC another Razr foldable phone will be launched this year.

Foldable devices accounted for just 1.1% of total smartphone shipments in 2022, according to research firm IDC, and are only expected to increase to 2.8% in 2026. But Zhao believes there is a future for these devices, although he acknowledged challenges including the weight and battery life of these smartphones at present.

Zhao would not be drawn into discussing sales targets but said he is focused on making the best foldable products that will in turn help its growth.

“Our ambition and goal is to develop the best foldable phone, so the technology was number one for foldable phones. And if we do this, I think the market will get better and better, and the brand, all these things can grow based on this product , Zhao told CNBC.

The Magic Vs currently folds as a book. Other companies including Samsung and Oppo have launched devices that fold upwards like a traditional flip phone. Honor doesn’t have a smartphone like this, but Zhao said the company is “seriously” considering it.

“We have this consideration, to be honest. How and when I can’t reveal too much. But the direction we … seriously consider it,” he said.

Honor’s Huawei story

Honor was a brand under Chinese telecom giant Huawei. But US sanctions in 2020 cut off Huawei from critical lands and access to Google’s Android software, which crippled the company’s mobile business. Huawei was at one point number one in the world.

To help the brand survive, Huawei sold by Honor 2020 to a consortium of buyers that included the government of Shenzhen, the city where the company is headquartered.

It allowed Honor to regain access to the critical chips and software it needs. Honor launched its first phone as an independent brand in January 2021.

So far, Honor has stayed out of the geopolitical and technological battle between the US and China. And CEO Zhao is not worried that sanctions similar to those imposed on Huawei will eventually be imposed on an independent honor.

“Why should we worry about this? Our business model is like Oppo, Vivo and Xiaomi,” Zhao said, referring to other Chinese smartphone makers that have also not had any sanctions against them.

“We provide to the industry and the end consumer, and also to the market, to our partners, we provide our value. You also know that this is the open competition and the open market. We follow all the policies, we develop our business in that country.”