Huawei Case Study

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Running Head: ANALYSIS OF BUSINESS NEWS 1

Analysis of Business News

Name

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.


ANALYSIS OF BUSINESS NEWS 3

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).
ANALYSIS OF BUSINESS NEWS 4

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.
ANALYSIS OF BUSINESS NEWS 5

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.


ANALYSIS OF BUSINESS NEWS 6

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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