Samsung: Huawei pricing not sustainable for a profit-seeking company

Samsung has cast aspersions on Huawei’s pricing strategy in the mobile network equipment market when asked by a UK parliamentary committee if years of unfair competition had driven some firms out of business.

Woojune Kim, an executive vice president at the South Korean vendor, said no company with shareholders that is trying to make a profit would have been able to price equipment at the same level as Huawei, which has been accused by its opponents of receiving unfair support, including financing, from the Chinese government.

“We have frequently seen bids that do not seem to make sense in the pricing,” said Kim in response to questions. “No company beholden to shareholders and to make profits could offer that sort of bid.”

Kim said the basic electronics costs were “pretty well known” throughout the industry and that Huawei’s prices did not look commercially viable based on an assessment of the “raw materials” expenses.

“We create over 500 million things per year and are pretty well versed in what it takes to make products. We were very surprised,” said Kim.

“It would not be sustainable for us,” he told the committee when asked how long it would take for Samsung to go bust if it tried to match Huawei’s prices. “Our shareholders would not be happy.”

One of the accusations made against Huawei on a lengthening charge sheet is that it has built its market position in Africa, Europe and parts of Asia by undercutting Western rivals such as Ericsson and Nokia. Firms that once competed in the mobile equipment market, including Alcatel-Lucent and Canada’s Nortel, have either collapsed or been swallowed up in mergers.

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