2020, a year which one can never forget, a year which can be considered to be the epitome of sorrow has brought many negative impacts in one’s life. China-borne pandemic Covid-19 has been the highlight of all the destruction. This has turned everything and moulded the way the world’s Economy used to function. Though the exact reasons for the outspread of this virus are unknown, there are many theories that scientists have come up with. One of the theories is that this entire outspread was a plan plotted by China to create World War 3 and take some advantages where weaker economies would be suffering. There have been charges against them by many developed economies including the USA. This has also led to some trade disagreements with China.
About the Company:
Huawei, a giant telecom supplier also provides operational and consulting services and equipment to enterprises inside, and manufacturing communications devices for the consumer market. Huawei has shown its presence in more than 170 countries. Huawei ranked the second position after Samsung with a 17.8% share of the global smartphone market despite a decline in shipments of 17.1% in the last quarter of the last financial year. But, 2020 has turned to be a nightmare for this company with numerous obstacles coming their way in the form of being banned in different countries.
Allegations against the company:
Since 2010, Huawei has faced criticisms for various aspects of its operations, particularly in regards to cybersecurity, intellectual property, and human rights violations. Claims have come up from the USA Government and its allies that its wireless networking is acting as a spy on other countries breaching the right of securing one’s private information. With the development of 5G Network, these claims became stronger and in 2019, it was banned from performing business with U.S Companies, UK and other US allies are being pressurized to do the same (Though, the company has never accepted these allegations and has not been proved wrong yet).
The company was already facing such challenges, and amidst all these, Indo-China dispute along the LAC leading to the death of 20 Indian Soldiers by the Chinese Troops, aroused an anti-China sentiment among Indians leading to some strict decisions taken by the Government against Chinese Companies. Last month, 59 Chinese Apps were banned to show the outrage against them and now, Huawei too is facing the same risk of either getting banned or witnessing a downfall in their demand curve.
Change in Future Plan:
So, the reasons for China being the planner for this pandemic, allegations against Huawei and Indo-China hostility has forced the company to revise its future plan for the Asia’s third-largest economy-India. Huawei Technologies Company has downscaled their target for 2020 up to 50% and is laying off more than half of its staff in the country. Huawei’s target has decreased from $700-800 million to $350-$500 million in revenue for 2020. Due to this, they have planned to lay of 60-70% of its staff.
The company had 700 as their Employee unit and hundred more through third-party firms. The workforce which was mainly affected in this 60-70% slash was in network support, field deployment, outsourcing, and sales department and it excluded Research and Development Centre.
This lay off would though increase the unemployment rate in our country but Huawei is set to lose billions of dollars from this ban or low demand.
Impact on the Company:
The current situation is as bad as it was in 2010 for Huawei, rather worse than that. This time all the major economies have turned the services of the company down. Huawei is on the verge of losing business to its competitors like Nokia, Samsung, Erickson, among others. Two circles of Tamil Nadu and Rajasthan for Bharti Airtel have been lost. With low demand in their services, they are unable to come up with any new projects or business portfolio and this also led to the layoff of employees. The only way with which the company can regain its market share and goodwill is by creating a securable chain of 5G network and providing them at the cheapest rate. Moreover, if the company can prove against the claims of the Company being associated with the Communist Party of China then they can rebuild what they have lost.
Impact on Indian Economy:
With the country getting ready to test 5G connectivity in 2019, the government has been flip-flopping on inviting Huawei to take part in the trials. But it’s a little too late to delete Huawei from India’s telecom story, given its low prices, domestic investments, and long-term repayment schemes, which a sector with Rs 7.7 lakh crore of debt is more than happy to have.
Blocking Huawei from rolling out 5G technology may cause loss of up to $ 63 billion in the GDP of the top eight technology markets, and at least $ 4.7 billion in the case of India, by 2035, a report of Oxford Economics commissioned by the Chinese telecom gear maker has claimed.
The Cellular Operators Association of India (COAI), the premier telecom lobby body whose core members include Reliance Jio, Airtel, and Vodafone-Idea, has often defended Huawei, it’s associate member.
Even if the government of India wants to keep out Huawei from the development of 5G in India, as it stated in September 2018, it may not be possible, since Indian telecom companies have already been testing 5G mobile networks with Huawei equipment.