Huawei Sees Cloud Success Wooing Government Buyers

Huawei is seeing early success with its pivot to cloud computing, despite concerns about the potential security threat it poses....
Huawei Sees Cloud Success Wooing Government Buyers
Written by Matt Milano
  • Huawei is seeing early success with its pivot to cloud computing, despite concerns about the potential security threat it poses.

    Huawei was one of the leading telecom firms in the world, making a popular line of smartphones and leading the industry in wireless network equipment. The company increasingly found itself under scrutiny from governments and intelligence agencies around the world, with concerns it provided an avenue for Beijing to spy on others.

    The US, in particular, took an aggressive stance against the Chinese firm, banning it from networks and pressuring allies to do the same. Around the world, countries followed suit, excluding Huawei from 5G rollouts, or explicitly banning it altogether. The US also successfully cut the firm off from much of its semiconductor supply, putting its smartphone business in jeopardy.

    Huawei began pivoting to other businesses, including cloud computing, in an effort to diversify and offset its losses. It appears the strategy is paying off, as governments around the world are embracing the company’s cloud offerings.

    According to a report by the Center for Strategic and International Studies’ Reconnecting Asia Project, developing economies and emerging markets are especially welcoming of Huawei.

    Emerging markets focus: The majority of deals (57 percent) are in countries that are middle-income and partly-free or not free. Africa leads the way with 36 percent of deals, followed by Asia (20 percent), the Americas (17 percent), Europe (17 percent), and the Middle East (10 percent).

    It appears Huawei is finding success bundling its services as part of a larger package, including giving customers access to funding from Chinese banks.

    Effective sales pitch: Huawei promises major commercial benefits to prospective customers, usually packages the delivery of hard infrastructure with services (60 percent of deals), and harnesses financing from Chinese policy banks to sweeten offers (nearly all deals for which financing could be identified).

    Interestingly, although perhaps not surprisingly, many of the countries embracing Huawei are ones that are considered “not free” or “partly free.”

    Non-liberal: 77 percent of deals are located in countries that are considered either “not free” (34 percent) or “partly free” (43 percent) according to Freedom House ratings.

    Huawei is clearly looking to achieve a degree of immunity from sanctions and bans from the West. It appears to have found a niche that is allowing it to do just that.

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