U.S. Trade Bans Hurting Huawei in China, Brand’s Future Looks Bleak

Huawei is feeling the pinch of its trade bans with the United States as a new report estimates that the company’s market share in mainland China fell to 16% in January, a steep decline from 41% in the first quarter of 2020.

Counterpoint Research, the firm behind this latest market share estimation, says that the decline can be attributed to Huawei spinning off the Honor label into its own brand along with a depletion in key components it needs to produce devices. It also will not be able to source the components needed to produce 5G smartphones at all. So while the spinoff did play a role, Counterpoint Research pins the cause of Huawei’s decline mainly on U.S. restrictions.

In an attempt to make the most out of its lack of parts inventory, Huawei has been focusing its efforts on the premium segment and only selling products with higher margins. This choice left a significant gap in the mid-tier smartphone range that has been swiftly gobbled up by Oppo and sister-brand Vivo. Oppo is now the leading smartphone manufacturer in China with 21% market share while Vivo is right behind with 20% share. While the two brands often compete against one another on store shelves, they are actually both owned by the same parent company: BBK electronics. BBK also owns OnePlus and Realme.

BBK Electronics can now confidently say that it commands more than 41% of the entire smartphone market in China now, with Huawei tying Apple and Xiaomi at 16% share each.

According to Engadget, the situation is unlikely to improve for Huawei. Analysts believe that the brand’s market share will continue to decline through 2021, and competitors won’t ease up on the gas and give Huawei a chance to recover. Oppo recently announced that the Find X3 phones would be announced on March 11 — additionally, some of its patents look particularly interesting — and it’s likely that Vivo, OnePlus, Xiaomi, and others will jump at the chance to snag more of the market share while Huawei is at its weakest.

In short, while Huawei was able to make some significant technological leaps with its phones before it was banned by the United States, the future now doesn’t look good for the once immensely powerful smartphone brand.

Of note, DJI was recently added to the “Economic Blacklist.” Looking at Huawei’s market position now, it will be interesting to see how DJI handles similar treatment.

Image credits: Photo by Alexey Novikov on Deposit Photos.