Did the US-China Trade War Spark Home Growth Support for Huawei Mobile Phones in China?

Chinese telecom and smartphone giant Huawei announced, this week, revenue growth of 23 percent for the first half of 2019.  This is the first financial report the company has released since the Trump administration launched the ban that forbid US companies from any deals with Huawei (in May).  A major player in the technology game, Huawei looked to simply shrugged off the impact of the new US “Entity List” ban, as growing demand for their smartphones among Chinese consumers stabilized their growth.

But the year is only half over, and the best may be yet to come. 

While the first half of the year has been solid for Huawei, outlook for the full year and beyond are even more promising.  The company lists that consumer business accounts for 55 percent of its 401.3 billion yuan revenue in the first six months of the year.  That is equivalent to approximately $58.3 billion USD; and it is up nearly 7 percent from the full year guidance in 2018.  As such, Beijing-based independent telecom analyst Fu Liang believes this growth suggests growth is the result of higher smartphone demand among Chinese consumers while other areas of growth are slowing. 

In the second quarter, alone, Huawei dominated all of the smartphone market in China, occupying 38 percent of the market share.  At the same time, shipments improved by 31 percent when the rest of the market is shrinking; more importantly, the company’s direct rivals (including Vivo and even major foreign brands like Apple) have declined more than 14 percent.  Considering the unstable geopolitical headwinds, analysts note that Huawei has definitely shifted focus to the domestic market of its consumer business. 

It appears Huawei launched a smart marketing campaign with various PR efforts to head off the US ban which seems to have spun the targeting by the US government as a means to celebrate national pride.  That could explain Huawei’s big boost in sales; but Huawei CEO and Founder Ren Zhengfei maintains that buying a Huawei phone is completely independent from any patriotic sentiment.  Of course, that does not stop distributors and sellers from marketing the phones in that way.