Exclusive video: The handset industry has too many vendors, meaning that consolidation is inevitable in the future, according to Richard Yu, chairman of Huawei Device.

He told Mobile World Live: “In future, in the handset industry only three to four vendors can survive.  We hope we will be one of the survivors.”

At the core of the issue is the fact that the vast majority of the profit from the handset business goes to just two vendors – Apple and Samsung – making it difficult for competitors to survive.

Huawei has an aggressive target of 60 million smartphone shipments in 2012, up from 20 million in 2011. The company has identified its home market of China as a driver of growth, as customers shift to smartphones from feature phones.

And while scale has traditionally been one of the key metrics for handset vendors, Yu said that Huawei’s focus is on growing its share of the more lucrative market sectors.

“Feature phones, you can ship out 100 million, or even more, and that is not meaningful. Because with the feature phone, the value is very, very low,” he said.

However, Yu also acknowledged that the company has one key challenge to address – brand. “The biggest challenge is the brand, definitely, because people don’t know Huawei. In the past, we were doing the infrastructure, we don’t need the consumer to know that,” the executive said.

Echoing comments made at Mobile World Congress, this weakness has led Huawei to focus on the quality of its products to compensate. In the light of Yu’s somewhat pessimistic view of the future of the sector, “that is why we want to provide the best performance, the best quality, the best user experience product.”

Watch the full video here.