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July 20, 2019
In our previous blog, we wrote about Huawei Ban. Read more about the Huawei ban: Huawei vs. Trump – a trade war that affects us all.
According to Ren Zhengfei, the founder and chief executive of Huawei, the ban on the Chinese tech firm and the world’s third-largest seller of smartphones would have meant a loss of $30 billion in revenue for the next two years.
However, based on the President’s statements following a meeting with Chinese premier Xi Jinping over the weekend at the G20 summit, it seems Trump’s administration has provided a reprieve for Huawei.
The President of the U.S said, “US companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it.”
Will it ever be the same again?
We all know how tough building and maintaining cordial business relationships can be. Hence, it might be hard for the U.S. to rebuild the relations after the mutual trust has been broken. However, the gravity of the issue and its dire consequences make us question, are things ever going to be the same again?
The latest element in the ongoing trade battle with China, America’s almost casual ban of Huawei is the example for the tech company to realize how dependent it is on the U.S.
Huawei is taking action to protect its reliance on the U.S. to simply function, from having a backup for chips to developing its own operating system to replace Android. And we only expect Huawei to see through these projects to make sure it is never facing the same circumstances in the future.
In addition, this is not just an unusual episode for Huawei, but Google and other US partners of Huawei will also face an immense fall through in the business. Over the year they have invested their time and resources to build a relationship with Huawei to boost their own business through the tech firm. But will this partnership be strong enough to not be affected by this incident?
How this will impact Huawei’s business?
Replacing their U.S. partners will not be an easy task for Huawei, both in terms of software and tech components. In the first quarter of this year, Huawei generated revenue of CNY 179.7 billion, with a year-on-year increase of 39 percent.
However, even after there was a partial lift to the ban, the company has reported an estimated loss of $30 billion in the yearly revenue caused due to the ban. This figure doesn’t account for the damage done to the brand. The company was planning to go over Samsung to get to the first place in the smartphone market within the year. This was a longtime goal of the tech firm, which might now take them longer to fulfill.
The news of lifting the ban must have come as a relief for the Huawei device owners. Even though Huawei promised to bring a number of high-end devices with Android Q, but the users are still not very clear on the situation. Furthermore, if both giants, Huawei and Google continue to work together like before, the users can be assured for the continuity of their phones through security and system updates.
Even after President Trump went public about lifting some aspects of the Huawei ban, the internal memo from the U.S. Department of Commerce still suggests that many companies are still giving the tech firm the blacklist treatment.
The implications of the ban are definitely unavoidable for Huawei, with the lift of the ban not being very well received. The current situation tells us it won’t be very easy for the Huawei to bounce back from this incident.
