Huawei Technologies SWOT & PESTLE Analysis
ID : 52285053 | Oct 2017COMPANY PROFILE - Huawei Technologies
Business Sector : Telecommunications
Operating Geography : China, Asia, Global
About Huawei Technologies : Huawei Technologies is a leading global information and communications technology (ICT) solutions provider headquartered in China. Founded in 1987, Huawei's products, and services and ICT solutions, are consumed in more than 170 countries. With a workforce of 180,000 employees and sales volume of over USD 39 billion , Huawei is committed to leveraging the power of Internet of Things(IoT), cloud computing, big data, and software-defined networking (SDN) to help customers across industries, including energy, transportation, government and public sectors, manufacturing and financial services, to achieve their goal of digital upgrade.
Huawei Technologies Revenue : US$75.1 billion - 2016
Competitive Analysis of Huawei Technologies
| 1. Emerging leader 2. Focus on Innovation 3. Cost leadership 4. Technical Advantage | 1. The MADE IN CHINA preconception 2. Failure to Enter into the US |
| 1. Untapped Indian market 2. 5G Opportunities | 1. Threat of New Entrants |
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Strengths
1. Emerging leader: Globally No.1 in terms of sales of networking equipment. Huawei had held onto this position since 2014 when it overtook Sweden’s Ericsson. Huawei is disrupting smart phone market oligopoly of Apple and Samsung. Not only it is the leader in its home country, but over the past 2 years, Huawei has climbed to the top in Finland too, selling over 10 times as many phones as apple. Huawei is the leader in smartphone sales in Portugal and the Netherlands and the second biggest in Spain, Italy, Hungary, and Poland. While the industry enjoys only single-digit growth, Huawei clocked its shipments growth by 30% and revenue growth by 40% for 2016.
2. Focus on Innovation: Huawei has kept its focus on innovation from its early days. Be it World’s first 5g implementation on power grids or Hybrid Cloud Core Network or even IoT, Huawei has been the undisputed pioneer in network communications . Huawei was the recipient of ‘Best IoV Innovation’ Award at World Intelligent Vehicle Conference 2017. Open Innovation has been at the core of the company, and the company has invested at least 10% of their annual revenues in R&D every year for the past 26 years.
3. Cost leadership: Huawei has been competing with Xiami with its lower-priced Honor which is exclusively available online, thus cutting on retailer costs. At the same time, it has been competing with Apple and Samsung with its high-quality higher-priced Huawei-branded phones.
4. Technical Advantage: Huawei makes all products of wireless communication, that is, the chipsets inside smart phones that interact with the networks, the telecom networks that transmit signals, and the handsets themselves. Huawei leverages this advantage by offering discount coupons to carriers who buy Huawei's network communication products, thus making them a sweet deal on the smart phones.
Weaknesses
1. The MADE IN CHINA preconception: There is a gap between how customers see Chinese brands and how they see effective worldwide brands still exists. The overall inclination is to purchase things created in China yet marked in the West since most shoppers see Chinese trademarks as agents of low-value, low-quality products that rapidly get destroyed. Just 32% of abroad buyers say they have confidence in items with the "Made in China” tag.
2. Failure to enter into the US: Huwaei’s market share in the US is less than 0.5%, which doesn’t even make the top 5. It is known in the U.S. for providing moderately reasonable cell phones—is said to endeavour to enter the market for smart phones over the $500 territory, a market which is commanded by items from Apple and Samsung. Allegations on Chinese companies for spying on behalf of the Chinese government are a major factor for reluctance to buy Chinese brands in the US.
Opportunities
1. Untapped Indian market: Opportunities of ICT technologies in India are have been given a boost by government initiatives like Demonetization and Digital India. Paytm, one of the fastest growing e-payment wallets is backed by Huwaei’s infrastructure. Infosys’ Finacle is launching a cloud-based Core Banking System called Finacle FusionCloud in partnership with Huwaei which would target new–age banks and fintech companies. Also, smart phone penetration in India is only 31% as of June’17 according to IAMAI-IMRB.
2. 5G Opportunities: Huwaei is the clear leader 5G R&D. 5G technology provides speed up to 70 times that of 4G and network capacity of an estimated 1000 times the connections that 4G network can handle. Concepts like smart cities, homes and interconnected cars need the architecture of 5G where Huwaei is seen as an early leader.
The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.
| 1. Trump’s Protectionist policy 2. Help from Chinese Government | 1. Positive Industry Outlook 2. Increasing Labour Costs |
| 1. Chinese products are unacceptable in the US | 1. Proliferation of 5G 2. Spending on Digital Transformation to increase |
| 1. Change in tax laws and regulations 2. Laws support foreign investors | 1. Paris Climate Agreement Implications |
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Political
1. Trump’s Protectionist policy: Donald Trump has been talking about making America great again. In fact, globalization has been at the root of making the United States what it is today. But trump’s policies can have an adverse impact on the global economy, thus impacting the businesses.
2. Help from Chinese Government: Chinese cell phone producers have profited, and still do, from government bolster. For instance, they have possessed the capacity to use the assembling framework in Shenzhen, a purpose-built city constructed that obliges gadgets creators, and along these lines manufacture cell phones with leader standard specs effortlessly and at very low cost. Furthermore, Beijing offers residential cell phone producers tax cuts and loose work and ecological benchmarks.
Economic
1. Positive Industry Outlook: Smart phone sales are as yet solid, with 10% year over year increase in penetration, and the most noteworthy development rates coming from the 55+ age demographics, that is, the groups that have been the slowest in adapting to smartphones. Smartphone users in the US are looking at their gadgets even more than 9 billion times in a day which is a 13% increase from last year. The growth in smartphone usage signals to an opportunity for all telecom sectors, including network equipment/infrastructure companies, wireless and wireline/broadband carriers, and device manufacturers.
2. Increasing Labour Costs: Turns out that "made in China" isn't so cheap any longer as labor costs have risen quickly in the nation's huge assembling segment. Chinese assembly line laborers are presently getting paid like never before: Average time-based compensations hit $3.60 a year ago, spiking 64 percent from 2011, as per statistical surveying firm Euromonitor. That is more than five times hourly assembling compensation in India, and is more comparable to nations, for example, Portugal, and South Africa. The wage increment has meant higher expenses for organizations with sequential construction systems in China.
Social
1. Chinese products are unacceptable in the US: The United States is a market where consumers don’t change their preferences according to the price cut, consumers go for brand value which is almost invisible in the US. Being a product of China, that is, ”Made In China” is also a major factor for consumers reluctance to buy Huawei as Chinese goods are considered to be cheap low-quality non-durable products.
Technological
1. The proliferation of 5G: According to the Deloitte Industry Outlook 2017, the rise of data-hungry apps could push the carriers to switch to 5G technology. The promise of 5G— greater efficiency, more speed, and reduced latency which will be essential to supporting connected things in the future. Deloitte expects full, mass coverage of 5G services by approximately 2020. Biometric fingerprint sensors equipped smart phones are expected to reach 1 billion in 2017.
2. Spending on Digital Transformation to increase: IDC forecasts spending on Digital Transformation to have a 17.9% compound annual growth rate (CAGR) over 2015-2020. The quickest developing innovation classes related with Digital Transformation over the five-year figure are applications (21.8% CAGR), business services (22.0% CAGR), and cloud infrastructure (29.4% CAGR).
The unpublished sections of the entire PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.
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Copyrights and Disclaimer
Huawei Technologies SWOT and PESTLE analysis has been conducted by Nikhil Dargan and reviewed by senior analysts from Barakaat Consulting.
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