Date
18 July 2018
Richard Yu, chief executive of Huawei’s consumer products division, said consumers are the biggest losers in the collapse of the carrier deal with AT&T. Photo: Reuters
Richard Yu, chief executive of Huawei’s consumer products division, said consumers are the biggest losers in the collapse of the carrier deal with AT&T. Photo: Reuters

What Huawei can learn from Apple in doing business overseas

Today, consumers have a bewildering array of smartphone brands and models to choose from, depending on their budget and other considerations.

The world’s biggest handset makers – Apple, Samsung, LG, Sony, Huawei, etc. – offer the latest designs and technologies that enrich the experience of consumers with regard to mobile devices.

However, in the United States, which supposedly has the largest and freest economy in the world, the giant mobile service providers can limit the choices of consumers. This is what happened when AT&T walked away from a deal with Huawei to sell the latter’s flagship Mate 10 device.

The Chinese technology firm has been steadily advancing in the global smartphone market. It is now the third biggest player in the market, and some analysts say that it can even dislodge Apple from the No. 2 position as it steps up its overseas expansion drive.

A deal with AT&T would have helped Huawei to take a further step in challenging Samsung’s leadership of the global smartphone market by making an aggressive foray into the US arena.

But the deal, which was supposed to be announced at the CES consumer trade show in Las Vegas on Tuesday, was canceled by the US side at the last minute.

Although no explanation was given, industry watchers say AT&T’s decision may have something to do with security concerns since Huawei has a history of relationship with the Chinese military.

It was indeed a big setback for the Chinese company in its global expansion bid since the US is a major market where every major smartphone maker needs to establish a presence.

Richard Yu, the chief executive of Huawei’s consumer products division, did not beg off from his scheduled appearance at the CES Expo, and proceeded to address Huawei’s failure to clinch the US carrier deal.

Yu made the point that American consumers cannot have the best and widest choice of mobile devices if some products, including those of Huawei’s, are denied them.

“Everybody knows that in the US market over 90 percent of smartphones are sold by carrier channels,” he said. “It’s a big loss for us, and also for carriers, but the bigger loss is for consumers because consumers don’t have the best choice.”

Yu’s speech did attract the attention – and perhaps the sympathy – of many market players, industry watchers and gadget fans. He was able to show that the Chinese company is confident about the quality of its products, and its ability to compete with global rivals.

By focusing on the need for free and fair competition, Yu avoided being dragged into a discussion of his company’s alleged close relationship with the Chinese military and security concerns, aired by some US lawmakers, about its products.

According to media reports, several members of the US Senate and House intelligence committees had sent a letter to the Federal Communications Commission, citing a committee report on Huawei’s alleged ties with the Chinese government.

“Additional work by the Intelligence Committees on this topic only reinforces concerns regarding Huawei and Chinese espionage,” the letter said.

At this stage, there is no need for the Trump administration to comment on the issue since the premise is that it involves a commercial negotiation between the two companies.

It also cannot be ruled out that AT&T may have been under pressure from Apple and Samsung to abort the Huawei deal as both companies carry some weight for being the two largest players in the global market. Incidentally, AT&T was the first mobile carrier for Apple when iPhone hit the market 11 years ago.

Right now, Huawei cannot do much after the collapse of the AT&T deal except to keep a low profile. It may be difficult to find another US mobile operator to carry its products. It can sell Mate 10 using its own channels, but that may not be a cost-effective proposition.

The Chinese company must do a lot of spadework in terms of making it known to US lawmakers, government officials, regulators and the public that its products do not pose any security threat to American society.

It has to allocate some budget to enhance its public image in the US, and even seek the assistance of partners like Google to promote its business.

In today’s world, companies must pay close attention to the security and economic interests of the host country where they operate. They may even have to sacrifice some of their own corporate tenets to abide by the rules of the game.

Apple, the world’s largest company by market capitalization, announced on Wednesday that the operation of its iCloud service in mainland China will be transferred to a state-owned firm called Guizhou-Cloud Big Data Industry Company from Feb. 28 to comply with the country’s cloud computing regulations.

When considering the benefits of operating in a market with huge potentials, even Apple sees the need to sacrifice its own business interests to please the authorities.

Huawei perhaps could take a lesson or two from Apple in exploring the US market.

– Contact us at [email protected]

CG

EJ Insight writer

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