US sanctions hurting Huawei badly, says official

Published April 20, 2021
This December 18, 2018, file photo, shows company signage on display near the Huawei office building at its research and development center in Dongguan, in south China's Guangdong province. — AP/File
This December 18, 2018, file photo, shows company signage on display near the Huawei office building at its research and development center in Dongguan, in south China's Guangdong province. — AP/File

LAHORE: The US sanctions against Huawei have had a drastic impact on its global business and sharply slowed its revenue growth in 2020. Yet the Chinese tech giant is determined to fight back and rely on other countries for growing its business if the US does not change its policy towards the company.

The annual results for 2020 published in March showed that growth at Huawei had slowed, with the Chinese tech giant’s sales revenues going up 3.8 per cent to almost $136.7 billion from a year ago and net profit rising 3.2pc to $9.9bn in spite of the US sanctions that brought about serious operational difficulties for the firm in 2019 and 2020.

“The US sanctions have had a very big impact on Huawei’s business. If not for this impact, I think the company’s latest annual report would probably have shown 15pc or 20pc growth – both in terms of revenues and profits,” Karl Song, global vice president of corporate communications at Huawei, explained in response to question by Dawn during a media roundtable recently.

Elaborating further, Mr Song said that in the second quarter of 2020 Huawei shipped 55 million high-end smartphones, making it top selling brand in the world, surpassing Samsung. “We were already under sanctions at this point, and we still managed to temporarily achieve this position as the world’s number one. If not for the sanctions, we could have remained on the top spot for years.”

Now, the number of high-end smartphones the company is shipping has declined dramatically. But thanks to the “8” part of our “1+8+N” strategy, which increased by 65pc, the impact on its revenues was not so serious. In fact, the Chinese tech giant saw growth of 3.3pc last year. In the company’s 1+8+N strategy, “1” refers to the smartphones, while “8” includes PC, tablet, TV, audio, glasses, watches, locomotives, and headphones. On the other hand, “N” refers to mobile offices, smart homes, sports and health, audio-visual entertainment, and smart travel products.

“We acknowledge that the US sanctions have had a very big impact and will continue to create difficulties in 2021 and 2022. It’s extremely difficult for us but as a big company we are resilient and we can find some other growth engines,” Mr Song said.

“We have the car manufacturing, the “8” and “N” parts of “1+8+N”, the digital power solutions, the 5G 2B business, and smart mining projects. We’ve signed more than 2,000 5G 2B contracts. Globally, we have more than 3,000 ongoing projects. The digital transformation market is booming. The cake is growing, so Huawei can get a slice of this big cake, and that is enough to survive. So we are confident we can survive,” he went on to explain.

The official said the company is continuing to invest very heavily in R&D to secure Huawei solutions and innovative products that allow it to better serve its customers and to create value for them.

“Huawei has almost 200,000 people working for it. They never give up,” he added.

Published in Dawn, April 20th, 2021

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