SWOT Analysis of Huawei. Huawei is a tech multinational Chinese company. It produces Smartphones, smart TV, dongle, EMUI, network and telecommunication equipment, and other electronic gadgets both for consumers and companies as well.
Ren Zhengfei is the founder of Huawei brand and he laid the foundation of the company in 1987. The headquarter of the company is in Shenzhen, Guangdong, China. The focus of Huawei was on producing smartphones. But over time; the company has shifted its focus on the production and development of network and telecommunication equipment, consultation, and operational services to its customers everywhere.
Some of the subsidiary brands of Huawei are HiSilicon, Honor, iSoftStone, Amartus, Hexa Tier, Caliopa, FutureWei Technologies, and ChinaSoft International.
Approximately 194000 people were working for Huawei by the end of 2019. The brand is providing products and services roundabout in more than 170 countries across the world. The annual revenue of Huawei was 122.972 billion dollars by the end of 2019, out of which the net profit of the brand after excluding all the expenses & costs was 8.971 billion dollars.
In the swot analysis of Huawei, we’ll discuss the strengths, weaknesses, opportunities, and threats of the company in detail. For external factors, check out the pestle analysis of Huawei. Now, it’s time to further analyze different factors one by one. Here’s the swot analysis of Huawei;
Strengths of Huawei
Some of the strengths of Huawei are as follows;
Variety of Products in Portfolio
Huawei has a variety of products in its portfolio to offer it to the customers. If we study the growth rate of Huawei, the company’s sales graph has been increasing for the past few years. Huawei comes in the 3rd position in the international market after Apple iPhone and Samsung.
Huawei isn’t only making a profit through the sale of smartphones. The company also offers a variety of products like smart TV, broadband network, dongles, tablet computers, Harmony OS, and telecommunication equipment. They’re also very popular among the public. The company has divided its products business into three main categories; customers, carrier, and business.
Ever since Huawei came into existence, the main focus of the company hasn’t changed. Its focus is on innovation, creativity, research, and development in technology. Technology innovation is one of the main reasons behind the success of Huawei.
According to an estimate, Huawei has approximately 21 research & development in different countries. Like the UK, Canada, the US, China, Turkey, Russia, Pakistan, Israel, Finland, India, France, Ireland, Belgium, Sweden, Columbia, and Germany. The company spends billions of dollars annually on R & D.
The brand has invested a lot of resources in the latest technologies like artificial intelligence (AI). Now the company falls among the leading companies in this category.
3rd position in the international market makes Huawei a lead player in the industry of smartphones. If we study the smartphone market and its widespread usage, then it has been increasing at a great rate. It means that there’ll be an increase in sales and more profit for the company as a result.
According to an estimate, Huawei sold approximately 223 million mobile phones in 2018. It was the highest number of items sold in a single year after the Apple iPhone. It has helped the company to achieve a great amount of market share.
Quality product with Low and reasonable prices is the main reason behind the popularity of Huawei. The company offers the same product as other expensive brands are offering, but at a lower price.
That’s why the brand has gathered a huge amount of market share in the international market in a very short time. The main focus of the company is to target middle and lower-class people with economical prices. The brand has succeeded in its strategy so far.
The low price of Huawei’s products doesn’t mean that the company has compromised on quality. The brand is manufacturing quality products and offering them to customers worldwide.
Although the company can’t compete with the brand name of companies like Samsung, Apple, and Google; but Huawei can provide quality products to its customers.
Weaknesses of Huawei
Some of the weaknesses of Huawei are as follows;
Political Conflicts & Controversies
Many controversies are floating in the international media about China. Since Huawei is a Chinese tech company, therefore, Huawei’s brand name is also under question because of the Chinese government.
Some of the main conflicts and news controversies are accusation of espionage, the arrest of the company’s CFO in Canada, the communist system of government, controlled media and economy, and many more.
All of the abovementioned news stories have tainted the image of Huawei’s brand image. That’s why the company couldn’t achieve the expected market share in the Western and the US market.
Weaker Position in the US
There’s a culture of higher spending in the US market because of the higher per capita of the country. People would love to experiment with new things and pay for them there. Unfortunately, Huawei couldn’t meet the desired target in the US market because of the news controversies and political conflict between the governments.
Besides those political conflicts, Huawei has faced many investigations in the UK, Canada, and the US. When we combine all of these factors, it’s getting very difficult for the company to achieve some success in the US market.
Most importantly, the US government, media, and the general public are never going to trust a company from a communist country. That’s why we see the strict policies and investigation for Huawei.
As we know that the main focus of Huawei has always been on delivering quality products at a lower price. It has helped the company to achieve the maximum market, billions of dollars, and the world’s leading brand. But when you minus the expenses from the revenue, then a little capital is left for plans of the company.
Less capital means that the company has less money for branding and marketing to present a better image of the brand. The way other world’s leading brands do.
Opportunities Available to Huawei
Some of the opportunities available to Huawei are as follows;
5G & AI Technology
The main advantage of R & D is that it provides you opportunities every day. Huawei as being a lead player in the international market has successfully grabbed the opportunity of 5G technology. The company is also expecting some positive outcomes in AI technology.
Successfully grabbing the5G opportunity means that the brand has become the first manufacturer of 5G modem devices in the international market. Even before the Intel, Samsung, and Apple. Now, the company has to capitalize on this opportunity by selling it to the other companies before someone else does.
New Marketing Strategy
When we talk about technology, research & development, and AI, then Huawei holds a strong position in the market. When we talk about marketing strategy, then Huawei’s competitors are far ahead of the company. They have influenced the market so much that their customers don’t trust another brand.
On the other hand, Huawei is following the simple marketing strategy of collecting the marketing share with quality products and lower prices. When the company’s strategy lacks is the vision for the future of the brand. It’s because you can’t always sacrifice profit to attract people’s attention. You have to add something else to make them loyal customers.
Retail Shops of the Brand
Samsung, Apple, and other leading smartphone brands have opened up their retail shop in those countries where they’re doing businesses. Retail shops give customers a real-life experience of visiting the brands that they’ve been using and admiring for years.
If the brand is expensive and sophisticated, then its office should reflect the same. Huawei should open up retail stores of smartphones under the brand name. Instead of relying only on online sales, it’s good but it lacks the real-life experience.
Indian Developing Market
As we have discussed earlier that Huawei is a weaker brand in the US. But the Indian market is a bit favorable to the Huawei. If the company successfully taps into the developing market, then it holds great potential to grow and capture the market share in the long term.
Threats Huawei has to face
Some of the lurking threats that Huawei has to face are as follows;
Highly Competitive Market
Although Huawei has gained a leading position globally in the smartphone market, it doesn’t mean that the company should relax now. Competitors like Apple, Xiaomi, Samsung, and other working day and night to get one step ahead in the market. Therefore, the brand should be working on R & D to retain its position.
Rules & Regulations
Rules and regulations of different governments pose a great threat to Huawei. The trade tension between the Trump administration and the Chinese government is a very good example of a threat. The company is also facing serious regulations from the Japanese, Canadian, and British governments. The smartphone market in those countries holds great potential to grow and expand.
Increasing Labor Cost
The reason Huawei was able to offer cheaper quality smartphones is because of the cheap labor cost. But recent amendments in the labor laws by the Chinese have made it difficult for the company to manage its expenses and offer the product at a lower cost.
After a thorough swot analysis, we have concluded that Huawei has made a great impact on the smartphone market in a very short time. The company has made an exponential both in terms of profit and market share. R & D has helped the company a lot to gain a competitive edge in the international market. But Huawei should also keep in the potential threats and find ways to comply with international laws.
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Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.