Huawei moves forward against headwinds caused by coronavirus

By Shen Weiduo Source:Global Times Published: 2020/2/17 21:08:40

A customer views smartphones in a Huawei store in Moscow. Photo: VCG

Huawei, the Chinese technology giant that has been showing its resilience amid a relentless US assault, is facing another headwind at home - the novel coronavirus disrupting its supply chain and hurting its handset shipments in 2020, a critical year for 5G rollout.

Now, the company is doing its utmost to stave off challenges, trying to make sure company plans are fulfilled. Huawei managed to resume production after the Chinese Spring Festival holiday before the majority of other Chinese manufacturers despite the viral outbreak. 

The company has vowed to push forward its 5G production plans after the cancellation of the annual Mobile World Congress (MWC) in Spain.  On Monday, it said it will hold a launch event of its 5G all-scenario products as planned and to be held online on February 24. The launch was supposed to be held during the MWC.

Huawei will launch new 5G devices including phones, PC, tablets and other Internet of Things (IoT) products during the online event.

The company was among the first batch of companies to resume work on February 3. The State Council, the cabinet, previously announced that enterprises should not resume work before February 2 due the coronavirus outbreak.

In a bid to ensure a timely launch, the company developed a "contactless" elevator that allows staff to use phone apps to call an elevator instead of touching the button, a mask recognition system that could warn of staff not wearing masks in certain areas, and widely adopted robots to do cleaning, disinfecting and delivery to prevent people-to-people contact.

Moreover, last week, Huawei secured a critical 5G approval in Europe - German Chancellor Angela Merkel's ruling conservatives reached an agreement to remove a ban on Huawei, which analysts said not only rebuffed the US' call but would also lead other countries in the EU to follow suit.

The US Department of Commerce announced on Thursday that it would delay a ban on some US companies supplying to Huawei, giving it the fourth 45-day extension.

Moving forward against the headwinds, Huawei shows that it has strength to sustain both the US assault and short-term impact from the coronavirus outbreak, despite the company faces pressure both overseas and at home.

"Pressure comes from the virus that is obvious. Phone sales in the Chinese market - where it generates about 50 percent of its revenue - are declining, and phone production is delayed due to the extended Spring Festival holiday," Xiang Ligang, an industry analyst who closely follows Huawei, told the Global Times on Monday. 

Xiang noted that although the company has managed to resume work, many of its suppliers have failed to restart production, which will delay its handset shipments.

Logistics have also been delayed, a Beijing resident told the Global Times on Monday that he ordered a Huawei Vision online on January 25, but he had not received it as of Monday. "I don't know it's due to the logistics or the product is out of stock," said the resident.

Overseas markets are not all "secured," as being allowed to participate in the European 5G market does not mean Huawei has secured orders and make profits, so there's still a long way to go, Xiang noted.

Although these difficulties are "terrifying," both the tech giants' suppliers and industry analysts have showed their confidence, noting that the virus will not impede the company's growth pace.

A Huawei supplier told the Global Times on Monday that though many of its factories cannot restart work until February 20, it still has enough inventory until the end of the month, and it will not lead to a shortage of supply.

"Production may be delayed, but Huawei's suppliers will also recover faster than others as we will go through a very strict review process before becoming a supplier of Huawei," said the supplier, who asked to be anonymous.

Another supplier in Nantong, East China's Jiangsu Province, told the Global Times on Monday that it has made every effort to restart production on February 10, and it has restored 70 percent production ability.

"It's a hard time for every industry, and we're striving to restore normalcy," the supplier said.

Huawei said in a letter to its partners that it will be the most reliable backbone and provide the strongest guarantee and tide over difficulties together with them amid the country's battle against the coronavirus.

It has offered several support measures to its partners, including moves to alleviate distributors' financial pressure, an extended warranty period, and incentives for the 10 best partners who made contributions to combat the coronavirus.

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