Sunday 19th May 2019, DonaldTrump’s administration announced to set Huawei and its subsidiary Honor on a blacklist of foreign companies, banning all the American companies doing business with them. The official reason announced that Huawei is accused of spying on users of its products. The immediate effect of that decision is that Huawei loses its software licenses (Android, Google services…) as well as its hardware suppliers (Intel, Qualcomm…). This ban is just collateral damage of an economical war between USA andChina with geopolitical considerations. The USA is using it as leverage during its trading negotiations withChina in addition to the 5G market were Huawei has a cheaper and more advanced technology than its competitors(Huawei has 70% of telecom market shares in Africa).We have to keep in mind that the American government already banned Huawei products to be sold on its territory in 2018. As the following figures are showing, it had little effect on Huawei since the brand has a strong presence worldwide whether in telecom or in smartphones and laptops.

Asides from Vivo, Huawei is the only manufacturer who saw an increase in sales volume in Q1 of 2019 in comparison to Q1 of 2018. With a staggering 50.3%increase, Huawei is solidly sitting in the 2nd place far ahead of Apple with a sales volume decrease of 30.2% and getting close to the number 1Samsung who saw its sales volume decrease as well with8.1%. Let’s keep in mind that Huawei managed to achieve this performance despite the decision of banning all Huawei products on its soil. Other brands that once were considered among the top are now on the edge of totally disappearing from the market. Sony for example decided to cut in half its mobile division staff. There were also rumors of selling the whole Sony Mobile to other investors as it was the case with the laptop brand, Vaio. LG totally stopped its smartphone production in its homeland Korea and moved it to Vietnam in order to cut the cost, without mentioning the fact that it officially retired from the French market. Huawei is not only performing the global market extremely well but also in the local market where it is totally crushing the other Chinese brands and keeps growing while the others are slowing down or losing market shares.The foreign brands, including apple, are struggling even more in the Chinese market where Huawei is the indisputable number 1. SinceGoogle is already banned inChina, the impact of losing google services license is minimal if not null.

So, we shouldn’t expect any change.

Huawei’s response was pragmatic and is working with its western partner such as Google to find a solution to lift the ban as soon as possible. Google already provided Huawei 90 days temporary license for its services until a solution is found. In the meantime, Huawei said that it has enough components stocks to keep its production running for a year. Also, it has almost finished the development of its own mobile OS to replace Android, in case a scenario like the one we are witnessing, occurs. In every situation, there are winners and losers. The losers are clearly Huawei and all its partners, especially and ironically, the American ones. The winners are clearly Huawei’s competitors and especially the Chinese ones but working outside China. Oneplus and its sister companies Oppo and Vivo are getting more and more global attractions but Xiaomi is the biggest winner in this situation. For years it imposed itself on consumer electronics generally as a high-quality Chinesealternative brand and in the smartphone market particularly as 2nd most known Chinese brand after the ogre brand, Huawei.

Of course, Xiaomi as any other Chinese brand can be blacklisted by the American government. However, it is unlikely to happen due to the fact that Xiaomi isn’t involved in the 5G network market and therefore, isn’t considered to be a threat for Trump’s administration. Yet, Xiaomi has a golden opportunity to grab more market shares from Huawei in the global market and will most likely succeed to do so, if Huaweiloses definitely its Android license. In addition to Huawei’s problems, Xiaomi is known for producing high quality and cutting-edge technology phones for almost half price of the premium brands like Samsung and Apple. Is it the downfall of Huawei? It’s early to say, and it is unlikely that it will lose definitively itsAndroid license. One thing is sure, the short-term impact of that ban is greatly damaging for the brand’s image. It was expected that Huawei would become the 1st global smartphone manufactures by the end of 2019.

But it looks like Samsung will keep its crown this year. For the rest, we can only wait and see…