Huawei’s African operations weather US pushback

The US ban on Huawei has had “no substantial effect on local operations”, according to Kian Chen, deputy CEO for Huawei SA.

Chen made the comments following the Chinese telecoms giant’s 2019 annual report, which points to the Europe, Middle East and Africa region as Huawei’s biggest market outside of China.

In a statement, the private company reveals global sales revenue totalled 858.8 billion yuan ($121 billion), a 19.1% year-on-year increase, for the period in review.

The results are in line with market analysis from GlobalData, which indicated Huawei’s revenue will most likely shrug off any pressure as a result of the US sanctions.

On the impact of the US ban on its African business operations, Chen says: “For over a decade, Huawei has established and continuously refined a strong business continuity management system. This system covers all of our end-to-end processes, from suppliers to Huawei, and then on to our customers. Huawei has diverse supply solutions for its key products.

“The US ban has had no substantial effect on our local operations. We will continue to serve all our customers and partners with focus and dedication, to meet their needs and contribute to the growth of the ICT sector.”

In 2019, Huawei found itself in the middle of a trade war between the world's two biggest economic powers, the US and China.

As the trade war intensified, the US Department of Commerce put Huawei on an export blacklist known as the entity list, citing “national security threats” due to the company’s close ties to the Chinese government.

Huawei has denied installing any backdoors in its networking equipment for alleged government spying.

In the annual report, Huawei’s rotating chairman, Eric Xu, reiterates 2019 was an extraordinary year for the company.

Despite enormous outside pressure, Xu says the company forged ahead with a singular focus of creating value for its customers. “We worked hard to earn their respect and trust, as well as that of our partners around the globe. Business remains solid.”

According to Chen, Huawei is seeing the most growth from its carrier business in terms of the local African region perspective.

“On the carrier side we see a huge area for growth in 4G/LTE,” states Chen. “Even with the 5G era already upon us, investment in 4G/LTE networks [are] still vitally important for operators in Sub-Saharan Africa and must remain a core focus of network construction for the immediate future.

“Currently, the mobile broadband penetration rate in Africa is only 47%, while the 4G penetration rate is merely 10%.”

Chen goes on to say on the enterprise side, Huawei sees opportunity in e-government, manufacturing, finance, transport and energy.

Huawei is currently the world’s second-largest smartphone seller and the largest telecoms gear-maker globally, with the company’s annual report stating it shipped a total of 240 million smartphones throughout 2019.

Zhao Likun, vice-president of Huawei Consumer Business Group in Southern Africa, says in 2019, the shipment of smartphones in SA increased by 10%, and retail sales increased by 22%.

According to Likun, sales of Huawei's smartphone on Google Mobile System (GMS) in the African region are still normal, albeit affected by the COVID-19 pandemic in the short-term.

In light of the US ban, the Chinese smartphone maker launched Huawei Mobile System (HMS) as its alternative ecosystem to GMS. This means Huawei devices produced post-May 2019 would not be pre-installed with GMS apps and will instead run on the HMS ecosystem.

Last month, Huawei introduced the Y7p to the South African market, its first smartphone pre-installed with the native HMS ecosystem.

Likun explains: “Huawei has begun selling its first Huawei Mobile System phone (Y7p) in South Africa and East Africa. Early users of Y7p have been using it for nearly a month. Huawei’s focus is to make the user experience as easy as possible.

“We did follow-up calls with customers who purchased the Y7p and received excellent feedback. The feedback results from this call survey results was given to operators and retailers to emphasis their confidence in our products.

“At the same time, most of the top apps that local consumers are keen to use have been listed on the Huawei App Gallery. Since the second quarter, Huawei has expanded Huawei Mobile System phones to the P40 series in the African region.”

Likun says his company will continue to sell smartphones in the country, while Huawei’s business focus will be on driving users on HMS. “This is only the third ecosystem to be developed for smartphones globally, following the Google ecosystem and the Apple ecosystem.

“Huawei has spent the past two years fine-tuning this ecosystem to ensure our customers will get only the best experience from these devices.

“In Southern Africa, we have established a new organisation, the Ecological Development Department, which is responsible for local partner collaboration and local developer education in Southern Africa, East Africa and West Africa. We are fully confident in the rapid development of the Huawei Mobile System in the African region,” concludes Likun.