How Does Huawei Stay Strong despite the US Ban? Literature & Language

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How Does Huawei Stay Strong despite the US Ban
The Big Question
Huawei Technologies, a mobile giant, has recently faced several challenges regarding its operations. The company has faced claims of unwarranted state support, association with the People’s Liberation Army, and cyber security concerns. These allegations has culminated to its ban in the U.S., which follows Australia in the drastic move. The U.S. is in the process of convincing its allies to also ban the company for allegations of privacy violations. However, the company has continued to excel in its operations, which begs the question as to why it continues to stay strong despite the ban. This study will be guided by one primary question and four secondary questions listed below:
Primary Question
1 How does Huawei stay strong despite the U.S. Ban?
Secondary Questions
* What prompted Huawei’s ban in the U.S. market?
* How has the company continued to perform in light of the ban?
* What measures has the company taken to safeguard itself from the impact of the ban?
* Are the above measures effective?
* Will the company maintain the trend over a period of five years?
Hypothesis
Many companies face competition challenges and other common types of obstacles. However, Huawei’s case is unique as it encompasses the national interests of the two countries. Therefore, this study expected that Huawei’s performance would decline following the measures. However, the company has continued to register better performance and hence the study hypothesis that Huawei’s performance may not decline immediately, but gradually. Nonetheless, the company appears to be implementing strategies to remain afloat because any other company without a sound strategy could be declining more rapidly.
Background information
Huawei Technologies Co. Ltd is a Chinese multinational company founded in 1987 in Shenzhen, southern China, which are still its headquarters. The founder, Ren Zhengfei, a former Deputy Regimental Chief in the People’s Liberation Army began the company by focusing on the manufacture of phone switches. The company designs, develops and sells telecommunication devices among other consumer electronics. The company began by making communication equipment for mobile phones and has grown to become a global force with approximately 180,000 employees. It has distributed its products and services to over 170 countries around the world. It surpasses Ericsson in 2012 as the largest telecommunications manufacturer in the world. In 2018, the company overtook Apple as the second-largest smartphone manufacturer behind Samsung (Gibbs). In December 2019, the company announced that it had attained a revenue growth of $121.72 billion US dollars (Gibbs). The growth has been exponential, making the company one of the promising companies for investors. The company was able to rise above the competition in the most unexpected manner. Its tremendous growth raised questions, attracting both lovers and critiques in equal measures.
History of the U.S.-China Cold Relationship
The most common hypothesis on Huawei’s woes center on the cold war between the U.S and China. The two countries have clashed over the technological infrastructure in Europe, Asia, Latin America and Africa, in which Huawei’s plan to roll out the 5G network was perceived as a superiority show (Karabell). Some analysts believe that while other Chinese companies also operate in the U.S, Huawei has been targeted because of its close associates with the Chinese Communist Party. The analysts allege that the U.S felt threatened that China would use Huawei to overthrow it as a superpower nation and enable China to become the superpower nation.
These allegations and accusations are deep-rooted and one cannot refute the existence of political interests in Huawei’s woes. However, this report is not interested in whether the woes are politically instigated, but on evaluating what the company is doing to remain afloat. Many companies face similar challenges and the ability of Huawei to sustain this pressure is a topic of interest as other companies will also be interested to know how Huawei is handling the cold relations between the countries. Therefore, analysis of the relationship between the two countries will only occur during the explanation of political factors and how these factors can influence the operations of a business in a foreign country.
Challenges
Critics raised concerns about the company’s meteoritic rise, claiming that it had received tens of billions of dollars in financial help from the Chinese government (Yap). The alleged support is to the extreme, which has enabled the company dwarf its competition and become a global threat to the major companies. Concerns over cyber security issues began when the United States Defense Department made public a list of Chinese companies that were operating in the country and were tied to the Chinese military. Besides Huawei, other companies that made it to the list include Hangzhou Hikvision, China Railway Construction Corporation, and China Telecommunication Corporation (Allen-Ebrahimian, & Dorfman, 2020). Following these allegations, the U.S President, bestowed with powers to invoke emergency economic powers, that include sanctions, imposed a ban on Huawei and the rest of the companies mentioned in the list.
The U.S government claimed that the company has infrastructure equipment that could enable the Chinese government to survey its territories. Following the development of the 5G wireless network, the U.S. and its allies has been calling on its partners against transacting any business with Huawei or any other Chinese telecommunication companies, such as ZTE (McCabe, 2020). Huawei has countered the claims by stating that its products are as safe as those from any other vendor and pose no cyber security risk. Such allegations in the backdrop of unresolved claims regarding state assistance puts the company at an awkward position in gaining trust from its users and markets (Chuin-Wei, 2019). Besides, the company has also been accused of helping in the surveillance and facilitating the mass detention occurring in Xinjiang re-education camps that attracted sanctions by the U.S (Kelly & Rodrigo, 2020). Such and many more associations paint a negative picture of the company, risking its profits.
How the ban would take effect
The President’s executive order directed that after midnight of Sept. 14, 2019, all non-American suppliers around the world would be barred from shipping their products that contained the U.S. technology to Huawei. Instead, the suppliers would require a license from the U.S. Commerce Department to continue operating with the Chinese tech giant. Components that were at risk included the company’s key operations, from semiconductors to displays to camera lenses among other vital devices (Ting-Fang & Li, 2020). The move risked over 190,000 employees losing their jobs and a total of over 850 billion yuan ($124 billion) in losses.
The company has already lost several of its employees to rival companies. For example, the company’s chip development team, who used to work around the clock, were faced with uncertainty and were calculating their next move. The company’s face is also poised to be a significant moment for the wider telecommunication’s sector. Suppliers will have to adjust to a potential loss of a big client, and rivals, including Samsung, Apple, Oppo, Ericsson, and Nokia are already prepared to grab the company’s market share. Despite this uncertainty, the company remains strong and promises to fight on.
Impact of the Ban on the Company’s Smart Phones
The company has so far shown resilience in its smartphone sector against the U.S. ban. In the April-June period, the company even overtook Samsung to become the world’s biggest seller of smartphones (Ting-Fang & Li, 2020). The U.S. ban is likely to wipe outs its Kirin series of chips that have been the company’s icon of innovation. The company also reported that it would soon launch its own Harmony OS 2.0 on its phones from 2021, signaling that the company did not have any hopes of resuming its collaboration with Google and agreed that indeed the shortage of chip supplies would negatively affect its smartphone sales.
The company’s sales already suffered in the European market with a drop of 16% in the April-June period. On the contrary, Samsung and Xiaomi enjoyed a 20% and 48% year-on-year growth according to a study by Canalays research group. Canalys’s analyst noted that Samsung was quick to capitalize on Huawei’s U.S misfortunes and was relentlessly working to position itself as a more suitable alternative to Huawei. The impact is quite dire that the company’s smartphone shipment is expected to fall to only 50 million units next year from 195 million units this year (Ting-Fang & Li, 2020). Huawei understands the bleak future and being an innovative company, has been relentlessly working on how to survive.
Study Methodology
This study will utilize systematic review in collecting and analyzing relevant data on how the company is sustaining itself. The systematic review will include various sources that include academic journals, books, and newspaper articles. Systematic reviews adhere to the strict scientific designed based on reproducible methods. Therefore, when used to carry out a study, the approach provides reliable estimates about the impact of the interventions, which allows defensible conclusions. The decision to rely on systematic review will also demonstrate any gaps in research on the strategies that Huawei is using to remain strong. The findings using this approach will also allow the application of theory to ascertain the effectiveness of any actions that the company is taking to handle the challenges.
Systematic reviews are usually carried out for purposes of diagnosis, screening, and prognosis. It will be important to diagnose and confirm whether the challenges that...