The acrimony between China and U.S. has somewhat replicated itself, and now the communist country finds itself at odds with its southern neighbour, and one the biggest consumer of China made products, India. In yet another piece of news that goes on to show the economic impact Chinese companies are bearing due to their Government’s actions, Huawei has cut its yearly India revenue targets by 50%, signalling a decline in the presence it boasts over the country. This came to light via an Economic Times report.
Huawei found one of its biggest markets in China’s immediate neighbourhood, amassing $1.2 billion in revenue from India back in 2017. However, never in its wildest dream could the company have predicted what the future held, as it went on to face a massive ban from the U.S., the unspoken leader of the free world.
While the US ban instigated a slew of other western countries to follow suit, India continued to allow Huawei to function uninterrupted until recently. Things however took a turn for the worse when China’s People’s Liberation Army crossed Indian borders for the second time in as many years, prompting widespread anger among masses against Chinese policies. That latter spilled into China-made products as well, resulting in bans, restrictions and even revocation of previously alloted contracts to Chinese infra companies.
Huawei felt the heat too.
During the financial year that ended on March 31, 2019, the company saw a 56% jump in revenue from its India telecom gear business. The revenue of Huawei Telecommunications (India) grew from Rs 8,282 crore to Rs 12,884 crore over the year, with net profit taking a staggering jump of 213 percent to Rs 623 crore. However, all of that changed with the year 2020.
The Galwan Valley dispute of last month became the final nudge for an uproaring ban of Chinese products, and played a huge part in some retaliatory measures taken by the government. Not only did India put a blanket ban on 59 hugely popular Chinese apps, the government also instructed two state-run telecoms firms- BSNL and MTNL, to swap out Chinese telecom equipment and instead use indigenously produced equipment, taking a jab at Huawei and ZTE.
All of this bundled together has led to Huawei curbing its expectations from the country, reducing its revenue target from $700-$800 million to $350-500 million for the year 2020, a massive drop of 50%. The company is also planning to mitigate any additional operating costs in India, and is planning to lay off 60-70% of staff, excluding those in research and development and the Global Service Centre, the report claims.
Huawei’s eroding presence in the country will hit Bharti Airtel and Vodafone Idea, the only two major telecom operators in the country that avail its services.
India is not the only market that’s slipping away from Huawei’s grasp. The United States, Britain, Australia, New Zealand, and some countries of the EU have already completely banned Huawei, an ode to the fact that Huawei’s journey may be coming to an end.