SWOT analysis

SWOT analysis

Strengths

1. Market position

2. Research and development capability

3. Wide user coverage

Weakness

1. Legal issues

Opportunities

1. Focus on 5G technology

2. Positive outlook for cloud computing market

Threats

1. Intense market competition

2. Political factors could Impact Business

Strengths

Wide user coverage

As an information and communications technology company, Huawei provides a rage of enterprise and carrier products. Huawei’s business covers a wide range of fields such as digital transformation cloud, video, IoT, and operations transformation in technology and smart phone. Huawei is a company that focuses on innovation and R&D. These areas provided Huawei with a large number of user bases. Huawei Smart City Solutions serves more than 120 cities in more than 40 countries around the world. At present, 197 Fortune 500 companies and 45 Fortune 100 companies have chosen Huawei as a digital transformation partner. In the smart phone space, in 2018 Q2, Huawei shipped 54.2 million units, with a market share of 15.8%, a record high, surpassing Apple and becoming the world’s second largest mobile phone manufacturer.

Research and development capability

Huawei has strong R&D capabilities. The company’s R&D focuses on new product development and update & iterations of existing products. Huawei’s R&D personnel account for about 45% of Huawei’s workforce. In 2017, Huawei’s annual investment in research and development (R&D) reached 89.7 billion Yuan ($13.8 billion). It ranks second in the world in R&D investment area, only after Facebook (John, J. 2018). Innovation is the core competitiveness of the high-tech industry. Investing so much money in research and development enables companies to develop innovative products, it also keeps the company at the forefront of its business and differentiates its products in the fierce market competition.

Market position

Huawei has a prominent market position in the international market, which can help the company attract more customers. Huawei’s global mobile phone market share in 2018 rose to 15.8%, becoming the world’s second largest mobile phone manufacturer. Huawei’s strongest market is China, and it is also popular in Europe, Latin America and the Middle East. Europe is the most successful overseas market for Huawei. One of the main reason why Huawei had a huge success in Europe is because they had a strong relationship with channels.

Weakness

Legal issues

In addition to affecting the company’s reputation, legal proceedings may also result in company penalties and fines. China’s telecom giant Huawei has taken root in Canada and is now experiencing more trouble in other G7 countries. In June 2018, the German lawsuit alleged that Huawei had stolen the most advanced technology, and Congress pressured Google to cut back the relationship with the company.

Moreover, Israel’s SolarEdge Technologies filed a patent infringement lawsuit against Huawei in a German court in recent time, claiming damages and recalling all Huawei products, all of which were suspected of stealing intellectual property

US lawmakers have urged investigations into Huawei’s research activities at US universities and are now urging US Internet giant Google to reconsider its relationship with the company (The Globe and Mail 2018).

Opportunities

Focus on 5G technology

Focusing on 5G technology can help companies capture new opportunities and customers and strengthen their existing market dominance. In the future, 5G technology will be used in most industries, especially the mobile phone industry. By 2025, there will be more than 100 billion connections all over the world, and the global data will produced and stored annually more than 180ZB, which is more than 20 times in 2015.

According to Reuters (2018), Huawei is establishing closer business ties with major telecom operators in Europe and Asia. Although the United States accuses it of posing a security threat, the company is still at the forefront of global competition for the next generation of 5G networks. China is about to become the world’s largest 5G market, and Huawei has a dominant position in this market. However, it has also been competing with competitors Ericsson and Nokia in several lucrative markets in rest of the world, including those that have long-standing US allies.

Positive outlook for cloud computing market

Cloud-base operations helps company scale their operations instantly, handle demand fluctuations and access systems and services on a variety of devices at relatively low cost. According to marketline (2018), the global cloud computing market will reach $297.2 billion in 2020, and this figure was only $60 billion in 2015. Like other major technological revolutions in human history, the impact of cloud technology on society has gone beyond the scope of technology. Cloud technology has influenced business models and people’s ways of thinking. Many famous companies have been born in the cloud in the past decade. For example, Google, Amazon, and Aribnb, these companies make good use of cloud technology to share resources, improve user experience and reduce operating costs (Huawei 2018)

Weakness

Intense market competition

Huawei’s products are highly competitive in terms of price, service, function and speed of development of new products. n the mobile phone market, Huawei’s main competitors Samsung, Xiaomi, OPPO may offer more attractive prices and services to consumers. These competitors may cause Huawei to have price pressure, which will affect the company’s market share.

Political factors could Impact Business

Due to political and national security issues, Huawei has been unable to expand its business in the United States. The United States claims that Huawei’s hardware can enable China to better monitor US companies and US government agencies.

In January 2018, U.S. telecom operators Verizon and AT&T were pressured by the U.S. government to unilaterally cancel their contracts and cease cooperation with Huawei to give up Huawei’s Mate10 Pro (BBC News. 2018). Verizon and AT&T were the largest and second largest in the U.S. radio communications company. Without the help of the two radio communications companies, Huawei’s development in the United States market is in trouble. In the United States, consumers generally purchase mobile phones by signing contracts with telecommunications companies. After losing the help of Verizon and AT&T, Huawei’s products will lose the sense of place in the US smart phone market.

John, J. (2018). Huawei R&D Spending Was Nearly $14 Billion In 2017 & It Plans To Spend More! – Gizmochina. [online] Gizmochina. Available at: https://www.gizmochina.com/2018/03/30/huawei-rd-spending-was-nearly-14-billion-in-2017-it-plans-to-spend-more/ [Accessed 6 Aug. 2018].

The Globe and Mail. (2018). Huawei faces new objections in Germany, U.S.. [online] Available at: https://www.theglobeandmail.com/politics/article-huawei-faces-new-objections-in-germany-us/ [Accessed 8 Aug. 2018].

Reuters. (2018). China’s Huawei set to lead global charge to 5G networks. [online] Available at: https://www.reuters.com/article/us-telecoms-5g-china/chinas-huawei-set-to-lead-global-charge-to-5g-networks-idUSKCN1G70MV [Accessed 8 Aug. 2018].

BBC News. (2018). Huawei’s US smartphone deal collapses. [online] Available at: https://www.bbc.co.uk/news/business-42631634 [Accessed 15 Jun. 2018].