Huawei’s Fallout: New Game-Changing Threat From China Attacks Apple and Samsung

In the absence of a pullback from the US, a huge hole in the form of Huawei will open in the global smartphone sector next year, a game changer in sales for the industry. It looks like a blacklist-induced chipset shortage will send Huawei’s sales plummeting when current stocks run out. While this appears to be an impressive opportunity for Apple and Samsung, it is under threat. China inc. He’s confident that Huawei’s recipe for success can be replicated and he’s moving quickly to do so.

The first of the blocks to flush out and repeat Huawei’s “premium smartphones for less” strategy has been the much smaller Xiaomi, which beat Huawei in Europe for the first time in the second quarter of this year. its revenues soared 65% as Huawei contracted. Xiaomi moved to third place, behind Samsung and Apple. In particular, Xiaomi recorded an increase in exports of premium devices (more than € 300) by more than 99% year-on-year.

Xiaomi has positioned itself as the likely successor to Huawei’s Chinese exports, but that is about to change. China’s Oppo is only behind Xiaomi in overall global sales, but much bigger in China itself. Counterpoint highlights Oppo as the other Chinese brand to watch. “Geopolitical politics and political affairs between nations are affecting the smartphone market in many ways; we see players like Samsung, Apple, Xiaomi and Oppo benefiting the most.” Oppo is part of BBK, which also has Vivo in its stable, and is a serious competitor to Apple and Samsung globally.

Back home to China, where Huawei has exploded as patriotic consumers responded to the US blacklist, Xiaomi, Oppo and Vivo chased Huawei’s unstoppable growth. During that second trimester, Huawei surpassed Samsung globally—An anomaly caused by the recovery of the Chinese market before others. But Huawei secured a staggering 46% market share in China itself, and that was no anomaly. Unsurprisingly, Samsung is now back on top globally. According to Counterpoint, Samsung secured 22% of the global market in August compared to Huawei’s 16%.

Analysts have suggested that, without a US pullback.Huawei could change as little as 50 million smartphones in 2021. Even with the loss of Google, the company would expect to sell between 180 and 200 million units. With 76% of its smartphones being sold in China, domestic sales will account for a large percentage of the drop. But exports will also continue to decline. And it is those export markets that Huawei’s domestic rivals are now targeting.

Building on its growth in Europe and its already strong position in other markets, notably India, some analysts have He suggested Xiaomi could become one of the three best players in the world. But now, as reported by Nikkei, Oppo “aims to have a market share of at least 5% in Europe by next year and plans to be one of the best players there in the next three years.” Backed by BBK, Oppo is arguably a more serious long-term threat than Xiaomi.

Oppo says it has tripled sales in key parts of Europe this year. “But for any smartphone maker,” Alen Wu, Oppo’s global sales leader, told Nikkei, “you have to achieve a 10-15% share of a market to be called a leader and achieve that. breakeven point … to reach that goal in the next two or three years. ” Xiaomi has shown that it can be done. Ironically, the most likely impediments to Oppo’s growth are Xiaomi and its BBK stablemate, Vivo, which will likely also increase exports to benefit from Huawei’s likely downfall. While both phone companies need to work on brand recognition outside of Asia, they have enjoyed rapid growth and now rank high in global sales.

Huawei was uniquely positioned to take on Apple and Samsung, ultimately aiming for that number one spot. Realistically, his moratorium has leveled the playing field for others. There may be some brand loyalty for Xiaomi in Europe, but nothing compared to the rigidity that Huawei had built. And recent rapid growth suggests recent conversions that can probably be converted again. All of which will be obvious to Oppo, Vivo, and BBK, which also have the OnePlus and RealMe brands and are a genuine threat to the world’s biggest smartphone makers.

By contrast, Apple and Samsung clearly enjoy strong consumer loyalty. But Huawei has shown that it can be attacked successfully. When Huawei toppled Samsung in the second quarter, while relying on strong sales from China, Canalys noted that it was “the first quarter in nine years that a company other than Samsung or Apple has led the market.”

So what about Huawei? As I’ve reported before, the company has adjusted its strategy, focusing on its software ecosystem as it prepares for a smartphone chipset deficit. For the new strategy to be successful, it needs other manufacturers, probably Chinese, to adopt it as an alternative to Android. Doing so will work well in China, but it will be an inhibitor in Europe and elsewhere. It’s hard to see why any OEM with the opportunity to target European consumers would do anything to make that job difficult or help a rival.

The scale opportunity for Oppo and Vivo has opened directly due to Huawei’s blacklist restrictions. Huawei was able to overtake Apple and target Samsung. We now have multiple Chinese brands looking to replicate the recipe and achieve the same. Clearly, these Chinese brands will compete for market share with each other, and Huawei will remain in the picture, albeit diminished. For Apple and Samsung, however, the net result is an increasingly competitive market driven by exporting Chinese manufacturers capable of changing the economics of the industry.

Reports this week that Huawei may sell its Honor brand to free it from US sanctions perfectly illustrate the scope of the changes we can see now. Beyond that, there is the small matter of an election in the United States. One cannot help but conclude that the relative silence of Huawei and China awaits the outcome and an assessment of the changes that may come. Meanwhile, BBK has emerged as the Chinese smartphone giant most likely to win the crown, although its brands appear to publicly distance themselves from the parent company (all of which are private companies) and truly compete.