Huawei Case Study

Running Head: ANALYSIS OF BUSINESS NEWS 1
Analysis of Business News
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Institution
ANALYSIS OF BUSINESS NEWS 2
Analysis of Business News
The business environment is highly competitive. Companies have to invest in areas that
have the maximum growth potential. Business decisions are made based on the risk-benefit
dynamics. Here, risk includes the cost of doing business and the resources that a given company
invests in a given industry. Companies are continually evaluating their business models and the
evolution of the business environment to ascertain whether there are market opportunities they
can take. As such, here the focus will be on Huawei, a leading Chinese technology company.
Huawei is one of the largest technology companies based in China. The company has
invested heavily in the technology sector. However, in recent years Huawei has found itself
operating on the edge due to the fractious relationship between China and the US. Chinese
technology companies operating in the US have come under intense scrutiny in the recent past
due to their perceived role in further the agenda of Chinese intelligence gathering and
government agenda at large. Huawei took a major hit since it is one of the companies whose
products are banned in the US. Additionally, Huawei mobile phones do not have access to
Google, which was a major blow to the company. Lack of access to Google services implies that
Huawei phones are less useful to the Android users across the world who cannot afford to lose
the critical Google services. Huawei had gained a significant share of the smartphone market due
to its ability to develop high-end quality smartphones that could rival key industry players such
as Samsung. The move by the US to blacklist Huawei had a significant impact on its fast-
growing smartphone sector, and the situation has not been helped further by the business
disruptions caused by COVID-19.

Huawei has had to restructure its business to take advantage of other opportunities in the
market. According to The Economist (2021), Huawei is one of the few non-carmakers who had
slots during the Auto Shanghai show that opened on 21st April 2021. The Huawei booth was one
of the most popular as consumers took their turns to have a glimpse of what Huawei has in store.
Huawei has partnered with SERES, another Chinese technology giant and automaker, to launch
the SERES SF5 model (Chen, 2021). Huawei is already selling electric vehicles in its flagship
stores across China. The technology giant has been forced to get new revenue drivers due to the
devastating impact of the US sanctions on its smartphone and network equipment operations. As
a result of the sanctions, 2021 marks a major transition period as Huawei emerges from its
toughest year (Automotive News, 2021). Huawei is hoping to compete favorably with other
technology giants such as Apple who are aiming to define the swiftly evolving realms of
connected homes, vehicles, and workplaces.
Huawei is entering a business arena that is already crowded, and industry players such as
Tesla, Nio Inc., and Xpeng Inc. are fighting for a market share in the largest electric vehicle
market in the world. However, Huawei has a set of competencies and capabilities it can to gain a
competitive edge. One of the key strengths that make the transition to the auto market ideal for
Huawei is its brand appeal. Huawei has a huge brand appeal in its native China. The company
has proven itself capable of developing high-quality premium products. Huawei technologies can
already be found on vehicles such as Mercedes Benz sedans, and the company has partnered with
other Chinese companies such as BAIC to develop smart car technologies (The Economist,
2021).
Thus, Huawei has the resources and the brand appeal that is necessary to create a disruptive
market force. Huawei also has the technological capabilities to create distinct high-quality
embedded systems that can make its electric vehicles more appealing.
One of the key weaknesses that can potentially affect the growth of its electric vehicle
division is its lack of specialization in the auto market. Huawei is a technology company that is
trying to penetrate the auto market to compete with established and upcoming market rivals. It
can be challenging to make the transition, which explains why Huawei has partnered with some
established industry players such as SERES. However, Huawei has the opportunity to explore
the highly potent electric vehicle market. The demand for electric vehicles (EVs) in China is
surging, and in 2020 1.3 million EVs were sold (The Economist, 2021). The Chinese EV market
accounts for two-fifths of the global market, and Huawei has the opportunity to carve out a niche
market. Also, Tesla is facing some challenges with the Chinese government questioning some of
the technologies used in the vehicles. The situation presents Huawei with an ideal opportunity to
establish itself. Huawei faces the threat of market rivalry due to the strength of the existing as
well as new players. Huawei is taking on a new challenge, and the onus is on the company to
further prove its innovativeness and agility.
The Chinese government has embarked on an anti-pollution drive to aid in the fight
against climate change. China wants all vehicles sold in the country by 2035 to be electric, which
presents Huawei with the perfect opportunity to establish a dominant market presence in the EV
market. The economic environment is also ideal since China and the global economy are
recovering from the economic recession caused by the COVID-19 pandemic. Huawei has the
opportunity to establish itself and compete for a market share in the EV market in an economy
experiencing a resurgence.
Huawei has no legal challenges in China, and the political environment is largely stable. Huawei
can develop high-quality EVs in partnership with key players such as SERES, and together their
core competencies can help with market dominance.

References
Automotive News. (2021, April 12). Huawei to invest $1 billion on auto
technology. https://www.autonews.com/china/huawei-invest-1-billion-auto-technology
Chen, C. (2021, April 22). Huawei starts selling smart cars in its flagship stores. South China
Morning Post. https://www.scmp.com/tech/article/3130497/huawei-starts-selling-smart-
cars-flagship-stores-across-china-offset
The Economist. (2021, April 22). Huawei and other non-carmakers invade auto
Shanghai. https://www.economist.com/business/2021/04/22/huawei-and-other-non-
carmakers-invade-auto-shanghai

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Running Head: ANALYSIS OF BUSINESS NEWS 1

Analysis of Business News

Analysis of Business News

disruptions caused by COVID-19.

connected homes, vehicles, and workplaces.

further prove its innovativeness and agility.

core competencies can help with market dominance.

Automotive News. (2021, April 12). Huawei to invest $1 billion on auto

Morning Post. https://www.scmp.com/tech/article/3130497/huawei-starts-selling-smart-

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