Chinese telecommunications giant Huawei has maintained its “strong number two position” in South Africa’s tightly-contested smartphone market, although the company’s fortunes are fading globally.
So said Akhram Mohamed, chief technology officer of Consumer Business Group SA, in an interview with ITWeb.
The interview followed Huawei, which briefly was the global number one smartphone maker last year, recently dropping out of the top five.
According to market analyst firm IDC, on the global front, besides the traditional smartphone makers such as Samsung (number one) and Apple (number three), Huawei has been overtaken by Chinese brands like Xiaomi (number two) and Vivo (number five).
Huawei’s loss of its grip on the smartphone market has largely been blamed on the sanctions imposed on the company by the US government.
In May 2019, former US president Donald Trump announced that Huawei – along with several other Chinese companies – had been placed on the blacklisted entities list. Companies on this list are unable to do business with any organisation that operates in the US.
With the ban, Huawei cannot work with companies such as Google, Qualcomm and Intel, among many others. In the case of Google, this means new Huawei smartphones are no longer able to ship with Google-owned applications pre-installed.
The US accuses Huawei of spying on customers through device “back doors”, which had been designed for use by law enforcement. Huawei has repeatedly denied spying for China, arguing that the company is a political victim of the trade war between the US and China.
The pandemic factor
Mohamed notes that although the sanctions have taken a toll, it has shown some resilience in the South African market.
While the US has been pushing several of its allies to take a hard-line stance on Huawei, the company has been embraced in SA, with president Cyril Ramaphosa giving it the thumbs up.
“We have been placed on political sanctions which affected our business quite considerably across the globe, but beyond that, I think for all companies and industries, the pandemic was also a factor,” says Mohamed.
“So, it’s not only about the unique circumstances to us, but it is different areas that contributed to these types of things. However, we are very happy to tell you that in South Africa, our business has proven to be much more resilient; so much so that we have remained a strong number two in the South African market for quite some time.”
According to Statista, as of June 2021, Samsung was the market leader, with 45.28% of the market share of mobile device vendors in SA. Huawei ranked second, with almost 29%, followed by Apple with 16%.
In fact, Mohamed comments, earlier in 2020, when Huawei took the global number one spot for a short period of time, in SA, the company also took the number one spot before it fell back to number two.
“Throughout all these challenges, we are still a very strong number two in the South African market. When I say number two, that is specifically in the smartphone segment, but we have introduced a diverse product portfolio from PCs to wearables. We have also expanded our IOT [internet of things] segment, and across the board on all these product categories, we are either in first or second position.
“Wearables are very new for us but we are already number one in South Africa.”
He notes the Huawei Watch Fit, the GT2E as well as the Band 6 have been the biggest drivers of the company’s volumes in the wearables segment in SA.
“For PCs, we have to compete with the likes of the Dells and the HPs of the world and it’s not an easy task. But within the entry-level business segment of the PC market (sub-R15 000), we have already become number one in that area. Of course, in the ultra-premium PCs, we are still working to grow that business. In the IOT business, we are undoubtedly number one in South Africa.”
Mohamed points out that Huawei SA has a diverse business and that is what made it resilient in the market.
He believes that many other OEMs that have purely focused on smartphones will find it harder to deal with this market.
New customer focus
In order to maintain the number two position in SA, Mohamed says: “We want to make sure we are still sustainable. We are not going to hide from the fact that we have had some massive challenges in recent times; so we also need to stay relevant in the market and ensure we meet the needs of our customers.
“Previously, we were looking at chasing market share and becoming number one; that was our focus. Now, that has not been our focus – our focus now is to take care of our customer base and if that transitions to taking over number one, it will be a nice to have but it’s definitely something that we are not fixated on.
“Our focus now is just to say our user base is massive and we are in a strong number two position; so how do we make sure we take care of the needs of these customers.”
The other challenge that Huawei has had to grapple with from the US sanctions was the absence of pre-installed Google apps on new Huawei devices.
Huawei Mobile Services (HMS) is Huawei’s alternative to Google Mobile Services and contains the apps and services which launch with the devices as standard.
Mohamed notes there was a lot of negative perception about HMS when it launched. “A lot of consumers’ mindsets were thinking that, for example, lack of Google services means that I can’t access Google Search. That is not true – you absolutely can.
“The perception was also that one cannot have Gmail on their phones – no that’s not true again, you can. So it’s that education part where we needed to come out and show them how to do this. That is what drove our unboxing services in stores.
“We have a free unboxing service in our stores where we take the customers through the entire journey and the learning curve. It’s similar like when you are moving from Android to iOS – there will be a need to learn new things.”
Another big move for the company was the release of Huawei Petal Search, he says.
Petal Search is Huawei’s mobile search engine and also provides users who are searching for mobile phone applications with results from the AppGallery (Huawei's official app store) and other third-party stores.
When a user searches for an app, Petal Search includes results from “trusted” app stores. This feature is integrated with the AppGallery. This improved user experience and app availability drastically, says Mohamed.
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