Huawei falls under the category of ICT – Information and communication technology. The headquarters of the company, Information and Communication Technology, is situated in China. Ever since the establishment of the company in 1987, the products and services of the Huawei have spread across 170 countries.
According to an estimate, there are approximately more than 180,000 people currently working in the company. The total annual sale of Huawei is roundabout more than 39 billion US dollars.
Currently, Huawei is working in industries like big data, cloud computing, software-defined networking (SDN), and the internet of things (IoT). The purpose of R & D in the abovementioned industries is to facilitate customers, government, financial institutions, energy companies, transportation systems, and meet the requirements of digitally transforming age.
One of the interesting facts about Huawei is that it’s a people-owned-company. President of the company, Ren Zhengfei, holds approximately 1.42% direct share of the company. The trade union committee and its affiliate Shenzhen Huawei Investment Company holds the rest of the shares of the company.
According to an estimate, 64% of the employees of Huawei hold shares of the company. We can say that Huawei’s employees are also the shareholders of the company.
In the PESTLE analysis of Huawei, we’ll discuss how external forces like political, economical, social, technological, legal, and environmental factors affect the whole functionality of the company. The thing about external factors to remember is that companies and businesses usually don’t have control over them. They have to adapt to new trends and change with time, either accept or be perished. We’ll discuss those factors one by one, here it follows;
Political Factors Affect Huawei
Some of the political factors that are affecting Huawei are as follows;
Trade with European Countries
Huawei’s market is a big company, and it sells smartphones across the world. Especially Huawei’s smartphones are popular in western countries. When it comes to selling your products in the European countries, then the European Union’s laws are in place and applicable. In other words, China has to follow the trade laws of the European Union.
If things go smoothly, then china would keep selling smartphones in the western market. For instance, if the European Union imposes sanctions on China regarding environmental concerns or labor law, then it would be a huge blow to the Chinese economy.
Conflict with the US
China and the US have been an economic rival for the past two decades. Trump administration lifts some of the sanctions on china to trade products and services in June 2019. However, Huawei removes 600 jobs at the Santa Clara research center the same month. Huawei’s president transfers those jobs to the research center in Canada because he says that the next sanction would restrict Huawei to communicate with its employees in the US.
Economical Factors Affect Huawei
Some of the economic factors are as follows;
Economic Conditions of the Target Market
One of the reasons behind the success of Huawei is that the company manufactures products and sets its prices based on the economic conditions of the target market. Huawei’s policy is simple, and that is to sell products, instead of sticking to the standards and selling fewer products.
The business market in Europe is stable, then the manufacturer produces quality products and sells them at higher prices there. The ratio of quality products with higher prices against cheap products with less quality provides Huawei a consistent supply of business throughout the year.
Local Market in China
As we know that Huawei sells a large portion of its product worldwide. However, the company’s macro environment policy is not limited to the outer market. It’s also targeting the local Chinese market as well at the same time. There’s been an increase in the sale of Huawei’s smartphones in the local Chinese market.
When it comes to selling your products, then you have to understand the psyche, needs, and wants of the target market. They vary from market to market, region to region, and country to country.
Chinese New Policies & Increasing Labor Cost
It’s no doubt that the sale of Huawei’s smartphones has increased a lot in recent years. But the Chinese government is introducing new labor protection laws that would cause an increment in the labor cost. Such regulations would force the brand to increase the salaries of employees. Hence, it would be an additional expense in the sheet, and that would impact the net profit of the company.
Social Factors Affect Huawei
Growing Demand & Poor Quality
People used to consider it awkward operating smartphones in public places. Now it has become a common practice worldwide. Since society and culture have accepted the usage of mobile devices at the meal table. Therefore, it has increased the demand for smartphones because it has become a necessity.
One factor that is impacting Huawei in the western-market, the US to be more precise, that people consider Chinese products to be cheap and have poor quality. It’s a widespread notion. Huawei is a Chinese company, and many US customers put Huawei in the same category. Therefore, the company has to fight this label with better marketing strategies.
Technological Factors Affect Huawei
R & D in the smartphone industry has pushed the innovation and creativity to its limits. 5G (5th generation telecommunication technology) technology is the growing interest. All smartphone manufacturers are researching and developing their products to be the first in the industry. The purpose is to serve the customer better with better speed, less energy, and cost.
Huawei, on the other hand, has the competitive edge of developing the 5G modem first. It provides Huawei a unique position on the table of technological giants like Apple, iPhone, and Samsung. It also means that Huawei would sell technology to other competitive companies, great pay off.
Legal Factors Affect Huawei
Some of the legal factors that Huawei keep in minds are as follows;
Patent laws infringe, and copyright issues are the troublesome area for many smartphone tech companies. When a company goes global, then it has to face multiple jurisdictions of different countries. Consumer laws of all the countries are also different; some countries have strict consumer laws. Therefore, Huawei should be careful about the patent, copyrights, and other laws.
Like many other Chinese companies, Huawei also has the label of poor treatment of its labor. The company has to follow the internationally accepted labor laws and treat its employees better.
Environmental Factors Affect Huawei
Environmental Laws & European Market
Industrial waste puts Huawei in violation of environmental laws. If the company keeps on violating the environmental laws, the European Union and the US would impose sanctions on China and Huawei. One thing we do know that sanctions and restrictions are bad for the life of any brand.
The good thing is that Huawei has taken serious steps in the reduction of the industrial and carbon emission to the atmosphere.
After a careful study of the PESTLE analysis, we have concluded that Huawei is a good company. But the problem it faces is due to the label of being a cheap Chinese company. That’s why people in western countries don’t give much importance to Huawei.
Huawei should follow the macro-environment policy of targeting both local and the international market at the same time. 5G is a huge competitive edge Huawei has, and the company should keep on utilizing it as much as it can.