Data and analytics firm GlobalData has analysed the data on Huawei and ZTE's US troubles, and has some serious suggestions on how they might crack the US market.
GlobalData hasn't had to span the globe to come to the conclusion that the US market just got tougher for Chinese telecom companies Huawei and ZTE.
That's because the heads of six major US intelligence agencies, including the CIA, FBI and NSA, have recently warned consumers against buying phones from them for national security reasons, even scuttling Huawei's set-to-be triumphant deal to launch the Mate 10 Pro with AT&T at what was almost literally the last minute.
Against this backdrop, GlobalData has some advice for both brands, stating they "need to take substantive measures to succeed in the lucrative US smartphone market."
{loadposition alex08}GlobaData reminds us that "Huawei is the third largest smartphone vendor in the world, but it has long wanted to expand into the US market, which is carrier-driven.
"However, telecom infrastructure sales from Huawei and ZTE have been effectively banned in the US on security grounds for years. Apple and Samsung dominate sales of premium phones in the US, but in China, Huawei holds its own against Apple and vastly outsells Samsung.
"In the US smartphone market, carriers are heavily regulated and reliant on government approval for mergers and acquisitions. In addition, vast majority of the US consumers buy phones at a carrier retail store, and phones must be customised to work on each carrier’s specific network technologies and frequencies."
In exchange, we're told "the carriers offer large marketing budgets and thousands of retail outlets across the country. ZTE has many carrier distribution deals with US carriers, but Huawei has failed to sell its phones directly to the US consumers online".
Avi Greengart, Technology Analyst at GlobalData, said: “Both Huawei and ZTE need to create some separation between the infrastructure and consumer devices sides of the business. They must also commit to physically storing all cloud services data in the US rather than China, to offset the quite legitimate fears that regulations differ widely between Western and Chinese governments.
“ZTE, a public company listed on Shenzhen and Hong Kong exchanges, should add a listing in New York or London and then run a marketing campaign highlighting the fact that its phones use US processors from Qualcomm, US software from Google, and routinely pass strict US carrier certification.
“Huawei’s ownership structure is more opaque. It should spin out a US devices subsidiary under the Honor brand, which has no negative associations and is easier for Americans to pronounce in any event.”
