China’s Huawei Technologies faces tremendous pressure in overseas smartphone markets, where the U.S. ban on its use of Google Mobile Services severely undercuts the appeal of its devices. Without the Google Play Store and third-party app ecosystem, Huawei phones simply can’t compete with similarly capable alternatives from the likes of Samsung Electronics Co. and OnePlus.
The company reported flat revenue in Europe, the Middle East and Africa alongside the drop in the Asia-Pacific. Those regions were two of its major growth engines in 2018, whereas now 59% of its sales are at home in China.
China’s ambitious 5G network construction projects, which started in the second half of last year, also helped Huawei weather the international storm and sustain its core businesses.
Founder Ren Zhengfei initially estimated that Huawei’s May 2019 blacklisting by the U.S. could wipe $30bn off annual revenues and threaten his company’s very survival, though he has tempered that outlook more recently. Huawei mobilised a massive effort to develop in-house alternatives to American software and circuitry, while U.S. suppliers like Intel Corp. and Microsoft Corp found ways to continue supplying Huawei vital components it needed to make its products. Huawei is also selling base stations free of American technology in another effort to bypass the U.S. ban.
With no relief from U.S. sanctions in sight and the coronavirus pandemic stifling business across all industries, Huawei anticipates its most difficult year yet. Chinese smartphone sales, which the company is now particularly sensitive to, are already hurting.
