Huawei’s India investment plan
▶ Three-year strategy to create local jobs, boost economy: analysts
Chinese telecom giant Huawei Technologies Inc’s recently announced three-year development plan for the Indian market could help the company mitigate a delicate situation with some Indian officials, who, following officials in the West, are reportedly concerned about Chinese companies’ operations, analysts said on Sunday.
The plan, which contains millions in investments planned for expanding local production and sales channels in the Indian market, could create thousands of jobs for local workers and help boost the local economy. The Chinese firm is betting this could win favorable support from the Indian government in its drive to expand sales in one of the largest smartphone markets in the world.
In the three-year plan, Huawei aims to invest more than $100 million in setting up more local production facilities and open 1,000 stores across India starting in 2019, a spokesperson for the company confirmed to the Global Times on Sunday.
The spokesperson, who asked not to be named, confirmed earlier Indian media reports that also suggested the company will pursue a dual-brand strategy to grab a bigger market share across different segments of the Indian market for both its Huawei and Honor brands.
Xiang Ligang, chief executive of telecom industry news site cctime.com, said that Huawei’s plan, announced at a time when it faces signs of intensified scrutiny in India, might have been aimed at both reassuring Indian officials of its localization plan and taking market share from foreign and domestic rivals.
Double goals
“This move could achieve both goals,” Xiang told the Global Times, pointing out that the $100 million investment would “no doubt” bring jobs and business opportunities to the local economy. “That would offer some incentive for local officials to take a more positive stance on Huawei’s efforts in the country.”
Some Indian officials have followed the lead of their counterparts in other countries, such as the US, where Huawei is banned because of alleged national security concerns, and have reportedly been considering restricting the Chinese firm’s operations in India.
The latest sign was that Huawei and another Chinese telecom giant, ZTE Corp, were left out of an Indian list of companies for trials to develop 5G networks, according to some media reports last month. Huawei has denied being left out of India’s 5G development.
“Generally speaking, when the company starts to manufacture devices in India, officials there might be more positive. They will have more oversight over the company’s operations,” Xiang said, adding that Huawei’s plan should offer a model for Chinese companies seeking to expand overseas.
“You need to bring opportunities to the local economy so the market will reward you.”
But Wang Yanhui, head of the Shanghai-based Mobile China Alliance, said that Huawei’s move was “primarily” aimed at boosting its presence in the Indian market, as it has been falling behind some foreign and even domestic competitors in the market in terms of sales.
“It is more of a business strategy to grab more market share from one of the largest smartphone markets that still has massive potential to grow,” Wang said, adding that Huawei’s move is a normal business decision and “we shouldn’t read too much into it.”
Although Huawei’s Honor brand reached the top five smartphone brands in India in terms of market share in the second quarter, it is still trailing Samsung, Xiaomi, Vivo and Oppo by a huge margin, according to data from the Hong Kong-based Counterpoint Research.
The Honor brand only has a 3 percent market share in India, compared to Samsung’s 29 percent, Xiaomi’s 28 percent, Vivo’s 12 percent and Oppo’s 10 percent, the data showed.
“Obviously, Huawei realizes that there is still huge room for its smartphones to grow in India, so that’s where the three-year plan sets in,” Wang said.
“That would offer some incentive for local officials to take a more positive stance on Huawei’s efforts in the country.” Xiang Ligang
Chief executive of telecom industry news site cctime.com