Despite US attempts to destroy it, Huawei continues to grow
But the US-led campaign against the Chinese company could only marginally slow growth, as Huawei already has the fifth generation (5G) technology (wireless technology). With loyal customers in emerging markets and parts of Europe, she expects to become the world's leading smartphone retailer next year.
"This campaign will only slow Huawei's growth in some countries of the European and Asia-Pacific markets," said Charlie Dai, analyst at Beijing-based research firm Forrester. "But I do not think it will retire from any market in the foreseeable future."
The global dominance of Huawei raised alarm in the United States accusing the company of having sold products that the Chinese government could use for espionage.
"The suspicion of Huawei is deep and there is a non-partisan, whole government campaign in Washington to destroy this company, not only in the United States, but around the world," said Samm Sacks, a cybersecurity policy China Digital business colleague in the New America Think Tank.
The attack on Huawei's business reflects the increasingly bitter rivalry between Beijing and Washington over who will control the technologies of the future. The safety of 5G is particularly worrying as it can carry huge amounts of data that connect robots, autonomous vehicles and other sensitive devices.
When the US government decides to further escalate the fight by preventing Huawei from buying US-made parts, as was the case with another Chinese technology company ZTE ( ZTCOF ) Last year it could cause considerable damage.
"Huawei is less dependent on US providers than ZTE, but without access to US technology, it will not survive long," wrote Dan Wang, an analyst at research firm Gavekal, in a note to his clients on Tuesday.
For Now, however, the Chinese company remains in a strong position to lead the introduction of 5G networks. Huawei says it has signed 30 contracts for 5G and is working on commercial testing with more than 50 mobile operators. It is also one of the top holders of 5G patents.
Huawei has built a strong presence in numerous markets around the world for decades, helped by reliable hardware and competitive pricing. It is the world's leading manufacturer of telecommunications equipment, although it is virtually ruled out the US market and last year overtook Apple (AAPL) as the second largest supplier of smart phones. Samsung is expected to overtake by 2020.
The company denies that its products pose a risk to national security. She also claims that it is a privately owned company with no connections to the Chinese government. His international reputation, however, is a blow.
Huawei Prepares for Tougher Times
The Polish authorities arrested a Huawei executive this month for alleged espionage of the Chinese government. The company dismissed the employee shortly after the arrest and said his actions had "discredited" Huawei.
In December, Canada arrested Huawei's Chief Financial Officer, Meng Wanzhou, at the request of the US Attorney's Office. The United States is demanding its extradition for allegations that it helped the company bypass US sanctions against Iran. Meng, daughter of Huawei founder Ren Zhengfei, denies any wrongdoing.
Australia and New Zealand have prevented Huawei from providing equipment for 5G networks in recent months. Germany and Canada are considering similar measures. Top global mobile service provider Vodafone VOD ) pauses the deployment of Huawei devices in core networks in Europe while talking to government agencies and the company.
In the UK, Huawei is already being monitored by a government governing body that warned of new risks last summer. The company says it is working to address them. But the pressure has gone beyond the Internet telecommunications industry, with organizations like Oxford University saying that they will stop accepting Huawei's money. Prominent American universities also distance themselves from the financing and equipment of the company.
The leaders of Huawei recognize that the environment is becoming increasingly hostile.
"In the next few years, the overall situation will not be as optimistic as we had imagined, we need to prepare for the hardships," Ren said in November. His comments were posted on a company website this month.
It's unlikely That Huawei will repeat the rapid growth it has experienced over the past 30 years and "give up some mediocre employees and reduce labor costs," Ren added.
After the wave of negative headlines, the company is stepping up its PR campaign. Ren, who seldom talks to the media, interviewed two separate groups of reporters in recent weeks.
He said he expects Huawei to generate $ 125 billion in revenue this year, up approximately 15% from 2018.
"If we are not allowed to sell our products in certain markets, we would we'd rather reduce a value. " Little, "Ren said," As long as we can feed our employees, I believe there will always be a future for Huawei. "
Emerging Markets and Faithful Customers
Huawei recorded 16% revenue growth in 2017. The most important Western competitors, the Finnish Nokia (NOK) and the Swedish Ericsson (ERIC), saw sales decline in the same year.
The Chinese company continues to make vibrant businesses in many emerging markets that are unlikely to leave their equipment.  Perspectives Tensie Whelan “/>
Revenues from Europe, the Middle East and Africa increased in 2017 by approximately 5% to 164 billion yuan ($ 25 billion). In the Asia / Pacific region, growth was stronger with sales up more than 10%.
Analysts predict customers in these regions will remain at Huawei because of very competitive pricing and loyalty.
The introduction of 5G wireless networks will be costly, as they require far more base stations than previous generations, says Kenny Liew, a telecommunications analyst with research firm Fitch Solutions.
Mobile operators will "want to cut costs as much as possible, and one way is to opt for cheaper, but proven, Chinese devices," he said.
Mobile operators in India, who have fought a brutal price war in recent years, are likely to favor Huawei as a more cost-effective option given the financial pressure in the industry, Liew added.
And Huawei's early involvement with countries like Nigeria and South Africa has earned him loyalty.
"There are countries in Sub-Saharan Africa where Huawei … took a risk to invest when other providers were cautious," Liew said.
Huawei could also benefit from the opening of the Chinese market for foreign players such as the British airline BT ( BT ) the last week the first foreign telecommunications group became a license received for direct sale to customers across the country.
"This step is definitely helpful for Huawei," said Dai, Forrester analyst. BT may need Huawei's help to better serve the local market, and a closer relationship could help Huawei outside of China.
The decision from Beijing fell just weeks after BT announced that they would not buy Huawei devices for the core of their system 5G network and removed Huawei devices from the heart of the 4G network. BT said it will continue to buy the Chinese company's products for other parts of its network.
In addition to telecommunications equipment Huawei's smartphone business is very successful. The company sold more than 200 million units in 2018, an increase of around 30% over the previous year. The increase in sales contributed to Huawei's consumer revenue growth to $ 52 billion, an increase of more than 40%.
Geopolitical high wire
Huawei could also help with political considerations.
Nations that have benefited from Chinese investment are reluctant to impose restrictions on geopolitical implications due to possible geopolitical implications, Liew believes.
Poland and the Czech Republic are already trying to negotiate a diplomatic tightrope and the To balance security interconnections with the United States with their need for Chinese investment.
Poland is reportedly trying to reduce tension with Beiing after he arrested the Huawei leader. According to the World Bank, Poland is China's largest trading partner in the region.