PESTLE Analysis of Huawei. Huawei is one of the world’s front runners and China’s top telecommunication, service-providing, and Smartphone Company. The company became operational in 1987 and its headquarters is located in Shenzhen, Guangdong, China.
The brand started its journey manufacturing mobile devices and then kept on increasing its portfolio with products like broadband, telecommunication devices and equipment, and consultation and operational services as well.
According to a study, Huawei is serving approximately one-third population of the world with its products and services. The company has reached 170 countries worldwide through its smartphone devices.
According to the most recent report conducted by Statcounter Globalstat in September 2020, Huawei ranks in the third position globally with a total market share of 10.58%, Samsung and Apple remain the first and second top brands with a market share of 30.58% and 24.99% respectively. The report analyzes the data from September 2019 to September 2020.
In the PESTLE analysis of Huawei, we’ll study macro-environmental factors and how they impact the company globally in the smartphone market. For internal factors, check out the swot analysis of Huawei. Here’s the detail of all of those factors, one by one. Here’s the pestle analysis of Huawei;
Political Factors
Conflict with the US & Trump Administration
One of the most notable political issues that Huawei is facing with the Trump administration and the US government; it’s not a new thing that a Chinese company is having issues with the US Congress and politicians.
It’s because the American people perceive national security when they see the success of the Chinese company in the US market. Smartphones are very good spying devices that the communist government might be using.
Cancelation of Sale of Huawei’s phones
In January 2018, President Donald Trump requested that US tech companies like AT&T and Verizon stop their dealings with Huawei completely. It resulted in the form of cancellation of the sale of Huawei’s latest smartphone Mat Pro 10 in 2018.
The US lawmakers and Politicians have gone one step further, their plans and restrictions are limited to Huawei only. They plan to impose restrictions on all the Chinese smart devices not to enter the US market.
Stop Dealings with Huawei
Even President D Trump sent a clear warning to those companies that are using the hardware of Huawei. If they use the hardware of Huawei, they won’t get government contracts. It puts the company in a very bad position in terms of market expansion and growth against leading competitors like Samsung and Apple.
Relationship b/w the US & China; Huawei’s a Victim
The relationship between the democratic US government and the communist Chinese government has always been tense. If we look at Huawei’s perspective, the tension between the two governments is costing the growth of the company in the world’s biggest market. It makes Huawei a victim of political conflict.
National Security or Protection of US Companies
According to a report by CBS News in 2018, China was planning to become a tech leader in the field of smartphones, robotics, and telecommunications in the international market. If this is the case, then the US would be the main competitor. She had to push back the growth of Chinese technology in the US market by playing the national security card.
We’re living in a very competitive world; you have to use every advantage you have in your pocket to get ahead of your competitors. That’s what the US government is doing and that is to protect the US companies.
Economical Factors
China’s Economy & Huawei’s growth
The Chinese economy has been growing consistently and it creates opportunities for the growth of Chinese companies. As we know the stable economic environment of any country determines the growth and proliferation of businesses in the country.
Chinese people are getting richer and they’ve extra money to spend. It makes them potential active consumers. This environment presents a great opportunity for Huawei and other Chinese companies like Xioami to grow by selling more products in the local Chinese market. It’s because an increment in per capita income has created a culture of more spending on luxury tech items.
Social Issues
Elderly Population Explosion in China
The Chinese population has been increasing exponentially for the past few decades. According to a recent study, the elderly population of China aged more than 60 years old has reached approximately 255 million people. The growing number of elderly people would greatly impact the growth rate of smartphones and telecom companies.
It’s because elderly people are a bit slower when it comes to catching up with the latest technology like online shopping, chatting platforms, and using other tech smart devices. The demand for smartphones would probably be lower.
Bridge the Tech Generation Gap
As we know the elderly population has been increasing, which would lower the demand for smartphones. At the same time, it also presents an opportunity for companies like Huawei to fill the gap by manufacturing easy and user-friendly devices for elderly people. Huawei can win the market by bridging the tech generation gap.
They’ll be a very good potential market because smartphones would help to spend their leisure time and connect with their friends and family. Those people aren’t resisting and refusing the use of technology, they just don’t know how to use it.
Once you provide them with user-friendly devices along with a stable internet connection, they’ll adopt the technology in no time. Now Huawei should plan a new marketing strategy for the elderly class of people and target them with easy-to-use smartphones. It holds great growth potential.
Technological Factors
5G Technology
5G is the latest development in the technology and telecommunication industry. According to a report by Villas-Boas in 2018, 5G technology could revolutionize the telecommunication network industry. It’s because it’ll be faster than 4G and wire connection. It’ll be so fast that it will replace some applications in certain industries.
Companies like Samsung, AT&T, and Verizon are developing new products based on the fast and speedy 5G network like self-driving cars. Some companies have even launched the technology in some states of the US.
Huawei has the credit of developing the 5G technology long before any other company back in 2009. Not only that, but the company has also completed the network verification procedure. It’s very beneficial for Huawei to launch the 5G technology at a large commercial scale and gather maximum market share.
AI Technology
The usage of Artificial Intelligence trends is growing among smartphone companies in the world. Mobile developers and software engineers are working on the application of AI in smartphones. Fortunately, Huawei has also been working on AI applications for smartphone devices.
Even Huawei launched smartphones like Mate 10 Pro and Mate 10 with the embedded feature of AI (neuron sensor tech) back in 2017. It’s much different than the contemporary smartphones of Apple and Samsung because it can differentiate between objects and people in different lights.
Legal Issues Huawei is facing
Ban in the US
Trump administration is pressurizing lawmakers to introduce and pass the bill of restricting the tech products like smartphones of companies like ZTE and Huawei. If it happens, then companies like AT&T and Verizon won’t use either the hardware of Huawei or sell their products. It’s because they have to comply with the local country’s laws.
Regulation Issues in the UK
Just like the US, Huawei has also lost a lawsuit in the UK by Unwired Planet International Ltd over copyrights and patent issues. The English Court asked the company to pay for the devices and 4G technologies. If the company doesn’t pay, then the law would ban Huawei from selling its products in the UK.
Environmental Factors Affecting Huawei
Environmental Laws by the Chinese Government
The Chinese government is getting serious about the environment and she has started a campaign against the violation of environmental laws. Huawei is complying with environmental laws, and the company has reduced carbon emissions and other harmful fumes.
The company has spent a considerable amount of resources on the protection and preservation of the environment and nature.
Conclusion: Huawei PESTLE Analysis Example Company
After an in-depth study of the pestle analysis of Huawei, we have realized that the company holds a strong position in the international smartphone market. It’s also right that the company is a victim because of is a Chinese company.
The world has issues with the Chinese system of government, but Huawei has to pay the price. Therefore, the company should comply with the local laws and political environment of different, and find ways to move along with it.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
