Archive for ‘Huawei’

22/05/2019

EE keeps Huawei in first British 5G network but halts handsets

LONDON (Reuters) – Britain’s biggest mobile operator EE said on Wednesday its 5G network would rely on equipment made by China’s Huawei, at least for the first few years, as it announced plans to switch on the next-generation services on May 30.

However, BT-owned EE joined rival Vodafone in pulling a Huawei smartphone from its 5G launch line-up because of uncertainty about support by Google’s Android after a U.S. move to block the Chinese firm’s access to its technology.

The United States has said Huawei is a security risk and open to spying by Beijing, a claim the Chinese company denies.

The government will rule imminently whether Huawei will be allowed to participate in these new networks.

EE Chief Executive Marc Allera said its planned 5G launch was “the start of the UK’s 5G journey and great news for our customers that want and need the best connections”.

Britain had given the green light for the launch, which will see six cities including London, Cardiff and Edinburgh switched on next week and another 10 by the end of the year, he added.

“We do believe it is important for the UK that we are in the pack of the leading nations (for 5G),” he said. “At the moment we have no instructions [from government] to change our plans.”

EE has said it was already removing Huawei networking equipment from it core network. BT Group’s technology chief Howard Watson, however, said 5G would start before Huawei was totally removed from the core of its network.

“We are launching 5G with Huawei in the radio access network and we are using an upgraded version of that existing core, which will then … be migrated away from,” Watson said.

HUAWEI DROPPED

EE and Vodafone have opened orders for 5G phones, for example from Samsung, to be available when their networks launch.

Apple does not yet have a 5G phone and analysts do not expect it to launch one until 2020 at the earliest.

Users were already regularly achieving speed of 500Mbps in tests networks, Allera said, adding that he was confident speeds of 1Gbps would be reached by the end of the year.
Average speeds at launch would be about 200Mbps, five times faster than typical top 4G speeds, while EE said smartphone tariffs would range from 54 pounds ($68) a month for 10GB of data to 74 pounds a month for 120GB.
It aims to have 1,500 5G sites by the end of 2019, targeting the busiest areas of the busiest cities, he said.
Industry analyst Kester Mann from CCS said he “applauded a realistic launch” that did not over-inflate expectations.
“Although being the first UK network to launch 5G will mean little to consumers, EE clearly see it as an important honor,” he said. Vodafone launches on July 3.
Huawei’s Mate 20X (5G) had been expected to be among the devices available on both company’s superfast networks, but EE dropped the company from a launch line-up that includes Samsung’s Galaxy S10 5G, and devices from Oppo, LG and OnePlus.
“We have put the Huawei devices on pause until we have got a bit some more information,” Allera said, adding that EE needed to be sure the devices it supplies are going to be supported.

Vodafone UK took the same step, stopping pre-orders for the handset before the launch of its network.

Huawei, the world’s second-biggest phone maker runs its devices on Google’s Android platform outside China, but the U.S. Commerce Department blocked Huawei from buying U.S. goods last week, throwing future software updates into question.

Britain was set to allow Huawei some participation in the radio part of 5G networks but bar it from the intelligent core. But a decision has not been announced, and the U.S. and some politicians are pushing for a more far-reaching ban.

Source: Reuters

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20/05/2019

Huawei’s use of Android restricted by Google

Google has barred the world’s second biggest smartphone maker, Huawei, from some updates to the Android operating system, dealing a blow to the Chinese company.

New designs of Huawei smartphones are set to lose access to some Google apps.

The move comes after the Trump administration added Huawei to a list of companies that American firms cannot trade with unless they have a licence.

Google said it was “complying with the order and reviewing the implications”.

Huawei said it would continue to provide security updates and after sales services to all existing Huawei and Honor smartphone and tablet products covering those have been sold or still in stock globally.

“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” it added.

Mobile market shares

What does this mean for Huawei users?

Existing Huawei smartphone users will be able to update apps and push through security fixes, as well as update Google Play services.

But when Google launches the next version of Android later this year, it may not be available on Huawei devices.

Future Huawei devices may no longer have apps such as YouTube and Maps.

Huawei can still use the version of the Android operating system available through an open source licence.

Ben Wood, from the CCS Insight consultancy, said the move by Google would have “big implications for Huawei’s consumer business”.

What can Huawei do about this?

Last Wednesday, the Trump administration added Huawei to its “entity list“, which bans the company from acquiring technology from US firms without government approval.

In his first comments since the firm was placed on the list, Huawei chief executive Ren Zhengfei told Japanese media on Saturday: “We have already been preparing for this.”

He said the firm, which buys about $67bn (£52.6bn) worth of components each year according to the Nikkei business newspaper, would push ahead with developing its own parts.

Huawei faces a growing backlash from Western countries, led by the US, over possible risks posed by using its products in next-generation 5G mobile networks.

Several countries have raised concerns that Huawei equipment could be used by China for surveillance, allegations the company has vehemently denied.

Huawei has said its work does not pose any threats and that it is independent from the Chinese government.

However, some countries have blocked telecoms companies from using Huawei products in 5G mobile networks.

So far the UK has held back from any formal ban.

“Huawei has been working hard on developing its own App Gallery and other software assets in a similar manner to its work on chipset solutions. There is little doubt these efforts are part of its desire to control its own destiny,” said Mr Wood.

Media caption We explain the controversy around Huawei’s 5G tech – using castles

Short-term damage for Huawei?

By Leo Kelion, BBC Technology desk editor

In the short term, this could be very damaging for Huawei in the West.

Smartphone shoppers would not want an Android phone that lacked access to Google’s Play Store, its virtual assistant or security updates, assuming these are among the services that would be pulled.

In the longer term, though, this might give smartphone vendors in general a reason to seriously consider the need for a viable alternative to Google’s operating system, particularly at a time that the search giant is trying to push its own Pixel brand at their expense.

As far as Huawei is concerned, it appears to have prepared for the eventuality of being cut off from American know-how.

Its smartphones are already powered by its own proprietary processors, and earlier this year its consumer devices chief told German newspaper Die Welt that “we have prepared our own operating systems – that’s our plan B”.

Even so, this move could knock its ambition to overtake Samsung and become the bestselling smartphone brand in 2020 seriously off course.


What about the US-China trade war?

The latest move against Huawei marks an escalation in tensions between the firm and the US.

The company is facing almost two dozen criminal charges filed by US authorities. Washington is also seeking the extradition of Huawei executive Meng Wangzou from Canada, where she was arrested in December at the behest of American officials.

It comes as trade tensions between the US and China also appear to be rising.

The world’s two largest economies have been locked in a bruising trade battle for the past year that has seen tariffs imposed on billions of dollars worth of one another’s goods.

Earlier this month, Washington more than doubled tariffs on $200bn of Chinese goods, prompting Beijing to retaliate with its own tariff hikes on US products.

The move surprised some – and rattled global markets – as the situation had seemed to be nearing a conclusion.

The US-China trade war has weighed on the global economy over the past year and created uncertainty for businesses and consumers.

Source: The BBC

16/05/2019

Trump administration hits China’s Huawei with one-two punch

WASHINGTON/NEW YORK (Reuters) – The Trump administration on Wednesday took aim at China’s Huawei Technologies Co Ltd, banning the firm from buying vital U.S. technology without special approval and effectively barring its equipment from U.S. telecom networks on national security grounds.

Taken together, the two moves threaten Huawei’s ability to continue to sell many products because of its reliance on American suppliers, and represents a significant escalation in the U.S. government’s worldwide campaign against the company.

The steps also come at a delicate time in relations between China and the United States as the world’s two largest economies ratchet up tariffs in a battle over what U.S. officials call China’s unfair trade practices.

Washington believes the handsets and network equipment for telecommunications companies made by Huawei could be used by the Chinese state to spy on Americans.

Huawei, which has repeatedly denied the allegations, said in a statement that “restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment.”

“In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”

The ban on U.S. suppliers, which appears similar to one on Huawei rival ZTE Corp. last year, could hit the shares of Huawei’s biggest U.S. suppliers, including chipmakers Qualcomm Inc and Broadcom Inc (AVGO.O).

In the first action taken on Wednesday, President Donald Trump signed a long-awaited executive order declaring a national emergency and barring U.S. companies from using telecommunications equipment made by firms posing a national security risk.

The order invoked the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. It directs the Commerce Department, working with other government agencies, to draw up an enforcement plan by October.

Members of Congress said Trump’s order was squarely aimed at Chinese companies like Huawei, which generated $93 billion in revenue last year and is seen as a national champion in China.

“China’s main export is espionage, and the distinction between the Chinese Communist Party and Chinese ‘private-sector’ businesses like Huawei is imaginary,” Republican Senator Ben Sasse said.

ENTITY LIST

Soon after the White House announced the order had been signed, the Commerce Department said it had added Huawei and 70 affiliates to its so-called Entity List – a move that bans the telecom giant from buying parts and components from U.S. companies without U.S. government approval.

U.S. officials told Reuters the decision would make it difficult, if not impossible, for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on U.S. suppliers. It will take effect in the coming days.

Commerce Secretary Wilbur Ross said in a statement Trump backed the decision that will “prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests.”

With Huawei on the Entity List, U.S. suppliers will need to apply for licenses to provide the Chinese company with anything subject to U.S. export control regulations. Obtaining such licenses will be difficult because they will have to show the transfer of items will not harm U.S. national security, said John Larkin, a former export control officer in Beijing for the Commerce Department.

The United States in January unsealed a 13-count indictment against Huawei accusing the company and its chief financial officer of conspiring to defraud global financial institutions by misrepresenting Huawei’s relationship with a suspected front company that operated in Iran.

The indictment was unsealed a month after CFO Meng Wanzhou was arrested in Canada on a U.S. warrant for her role in the alleged fraud. Meng, who maintains her innocence, is fighting extradition.

5G NETWORKS

Reuters reported on Tuesday that Trump was expected to sign his long-awaited executive order this week. The order does not specifically name any country or company, but U.S. officials have previously labeled Huawei a “threat”.

The United States has been actively pushing other countries not to use the Chinese company’s equipment in next-generation 5G networks that it calls “untrustworthy.” In August, Trump signed a bill that barred the U.S. government from using equipment from Huawei and another Chinese provider, ZTE Corp.

ZTE was added to the Commerce Department’s Entity List in March 2016 over allegations it organised an elaborate scheme to hide its re-export of U.S. items to sanctioned countries in violation of U.S. law.

The restrictions prevented suppliers from providing ZTE with U.S. equipment, potentially freezing the company’s supply chain, but the restrictions were suspended in a series of temporary reprieves, allowing the company to maintain ties to U.S. suppliers until it agreed to a plea deal a year later.

The status of Huawei and ZTE has taken on new urgency as U.S. wireless carriers rollout 5G networks.

While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper. Trump’s order applies to future purchases and does not address existing hardware, officials said Wednesday.

Source: Reuters

01/05/2019

China sentences second Canadian to death

The police officer shows the seized crystal meth on May 18, 2016 in Guangzhou, Guangdong Province of China.Image copyright GETTY IMAGES
Image caption The court said the Canadian was the leader of a drug production and trafficking ring (file pic)

A court in China has sentenced a Canadian citizen to death for producing and trafficking methamphetamine.

Fan Wei is the second Canadian to be sentenced to death this year. Ten others, including five foreigners, were also sentenced on Tuesday.

Relations between Canada and China have been tense since the December arrest of a Huawei executive in Vancouver.

Canada has accused Beijing of arbitrarily applying the death penalty, and have requested clemency for Mr Fan.

In January, another Canadian, Robert Lloyd Schellenberg, had a 15-year jail term increased to a death sentence – prompting condemnation from Canadian Prime Minister Justin Trudeau.

Beijing rejected his comments, saying that Canada was practising “double standards”.

On Tuesday, Foreign Minister Chrystia Freeland told journalists that Canada is “very concerned” by this latest death sentence.

“Canada stands firmly opposed to the death penalty everywhere around the world,” she said.

“We think that this is a cruel and inhumane punishment, which we think should not be used in any country. We are obviously particularly concerned when it is applied to Canadians.”

Global Affairs Canada said in a statement that the country “has raised our firm opposition to the death penalty with China, and will continue to do so”.

The diplomatic agency said representatives attended the 30 April verdict and sentencing trial for Mr Fan, and have called on China to grant clemency to him.

The latest case is likely to further inflame the months-long diplomatic row which started when Meng Wanzhou, the daughter of Huawei’s founder, was arrested in Vancouver on the request of US authorities.

Two other Canadian citizens, former diplomat Michael Kovrig and businessman Michael Spavor, are also being held by China and face accusations of harming national security.

The Jiangmen Intermediate People’s Court in southern Guangdong province said that Fan Wei was the leader of the drugs ring. Another suspect, Wu Ziping, whose nationality was not made clear, was also given a death sentence.

Nine others, including an American and four Mexicans, were given jail terms.

All were detained in 2012 and the trial took place in 2013.

Drug-dealing is punishable by death in China, and at least a dozen foreigners have been executed for drug-related offences. Many more are on death row.

However, the execution of Westerners is less common. One of the most high-profile cases involved British man Akmal Shaikh, who was executed in 2009 despite claims he was mentally ill and an appeal for clemency from the UK prime minister.

Source: The BBC

22/04/2019

Huawei says launches ‘world’s first’ 5G communications hardware for autos

BEIJING (Reuters) – China’s Huawei Technologies launched on Monday what it said was the world’s first 5G communications hardware for the automotive industry, in a sign of its growing ambitions to become a key supplier to the sector for self-driving technology.
Huawei said in a statement that the so-called MH5000 module is based on the Balong 5000 5G chip which it launched in January. “Based on this chip, Huawei has developed the world’s first 5G car module with high speed and high quality,” it said.
It launched the module at the Shanghai Autoshow, which began last week and runs until Thursday.
“As an important communication product for future intelligent car transportation, this 5G car module will promote the automotive industry to move towards the 5G era,” Huawei said.
It said the module will aid its plans to start commercializing 5G network technology for the automotive sector in the second half of this year.
Huawei has in recent years been testing technology for intelligent connected cars in Chinese cities such as Shanghai, Shenzhen and Wuxi and has signed cooperation deals with a swathe of car makers including FAW, Dongfeng and Changan.
The company, which is also the world’s biggest telecoms equipment maker, is striving to lead the global race for next-generation 5G networks but has come under increasing scrutiny from Washington which alleges that its equipment could be used for espionage. Huawei has repeatedly denied the allegations.
Source: Reuters
20/04/2019

Leica China video sparks backlash over Tiananmen Square image

A man stands in front of three tanksImage copyrightREUTERS
Image caption This year marks the 30th anniversary of the pro-democracy protests

A promotional video for camera company Leica has sparked backlash in China for featuring a famous Tiananmen Square image.

The video depicts photographers working in conflicts around the world, including a photographer covering the 1989 protests.

People on Chinese social media site Weibo have called for a boycott of the camera brand.

Leica has distanced itself from the video.

“Tank Man” was a lone protester who brought a column of tanks to a standstill during a crackdown on pro-democracy protesters in Beijing in 1989.

He refused to move out of the way and climbed onto the leading tank to speak to the driver. He was later pulled away from the scene by two men. What happened to him remains unknown.

Beginning with the caption “Beijing 1989”, the Leica video features a photographer taking the famous image. The “Tank Man” can be seen in the camera’s lens.

Users on Chinese social media site Weibo have been forbidden from commenting on recent official posts by Leica. However some people are managing to post carefully worded comments on earlier official Leica posts, BBC Monitoring has found.

A search of the hashtag Leica shows that 42,000 users have left posts on Weibo but only 10 are available to view.

Some comments urge users to “boycott the camera” and joke about the company being linked to “patriotic Huawei”.

Chinese technology giant Huawei has been restricted by the US and other countries over security concerns in telecommunications networks. Consumers in China have rallied around the company, which uses Leica technology in its latest mobile phones.

A spokeswoman for Leica told the South China Morning Post that the film was not an officially sanctioned marketing film commissioned by the company. However it features Leica cameras and the company’s logo at the end of the footage.

They added that the company “must therefore distance itself from the content shown in the video and regrets any misunderstandings of false conclusions that may have been drawn”.

The BBC has contacted Leica for additional comment.


How China keeps Tiananmen off the internet

By Kerry Allen, BBC Monitoring China analyst

China has banned all activists’ commemorations of the 1989 Tiananmen incident for years and has strictly regulated online discussion of it.

If users search for “Tiananmen” on domestic search engines like Baidu or social media platforms like Sina Weibo, they only see sunny pictures of the Forbidden City in Beijing. If any pictures of tanks running along Chang’an Avenue are visible in image searches, they are only from Victory Day parades.

Hundreds of references to 4 June 1989 are banned all-year round by thousands of cyber police, and Weibo steps up censorship of even seemingly innocuous references to the incident on its anniversary.

Simple candle emojis, and number sequences that reference the date, such as “46” and “64” (4 June) and “1989” (the year of the protests), are instantly deleted. Small businesses also struggle to market items on 4 June every year, if their sale price is 46 or 64 yuan. Such advertising posts are swiftly removed by nervous censors.

But creative users always find ways of circumventing the censors. For example in 2014, when Taylor Swift released her 1989 album, the album cover featuring the words “T.S.” and “1989” was seen as an effective metaphor by users to talk about the incident – as T.S. could be taken to mean “Tiananmen Square”.


More than one million Chinese students and workers occupied Tiananmen Square in 1989, beginning the largest political protest in communist China’s history. Six weeks of protests ended with the bloody crackdown on protesters of 3-4 June.

Estimates of the death toll range from several hundred to more than 1,000.

China’s statement at the end of June 1989 said that 200 civilians and several dozen security personnel had died in Beijing following the suppression of “counter-revolutionary riots” on 4 June 1989.

Source: The BBC

11/04/2019

China urges relevant countries to offer fair business environment for enterprises

BEIJING, April 10 (Xinhua) — China on Wednesday urged relevant countries to offer a fair, just and non-discriminatory business environment for enterprises of various countries, including Chinese ones.

Foreign Ministry spokesperson Lu Kang made the remarks at a routine press briefing when asked whether Australia applies double standards on the cybersecurity issue.

Recently, a number of Australian media reported that relevant Australian law mandated communication enterprises install “backdoors” for the Australian government. Google, Apple, Amazon and other technology companies have expressed serious concern about the act, saying it threatens cybersecurity in Australia and the world.

While the Australian side previously claimed that the country does not want any company in its communications networks that have an obligation to any other government. For this reason, Australia banned Huawei from the 5G telecommunications network.

Noting China has been closely following the relevant developments, Lu said the communication market and international cooperation will be seriously affected when it forces enterprises to install “backdoors” by legislation, which builds its own security and interests on the basis of violating other countries’ security and the privacy of their citizens.

“As you can see, the business communities have expressed serious concern about this,” Lu said.

A puzzling thing is that on the one hand, relevant countries use cybersecurity and sensationalize the so-called “security threat” of other countries or enterprises with trumped-up charges. On the other hand, they are doing things that endanger cybersecurity, Lu said.

“I am just as interested as you are in what the Australian government would say,” said the spokesperson.

Emphasizing that China has always attached great importance to and firmly maintained cybersecurity, Lu said that the Chinese side is willing to continue to actively participate in international cooperation in cybersecurity and work with all parties to build a peaceful, secure, open, cooperative and orderly cyberspace.

Source: Xinhua

09/04/2019

Huawei wi-fi modules were pulled from Pakistan CCTV system

Lahore surveillance system
Image captionThe surveillance system was built to monitor Lahore’s streets following a series of terrorist attacks

Huawei removed wi-fi transmitting cards from a Pakistan-based surveillance system’s CCTV cabinets after they were discovered by the project’s staff.

Punjab Safe City Authority (PSCA) told BBC Panorama it had told the firm to remove the modules in 2017 “due to [a] potential of misuse”.

The authority said that the Chinese firm had previously made mention of the cards in its bidding documents.

But a source involved in the project suggested the reference was obscure.

A spokesman for Huawei said there had been a “misunderstanding”. He added that the cards had been installed to provide diagnostic information, but said he was unable to discuss the matter further.

The PSCA confirmed that the explanation it had been given was that wi-fi connectivity could have made it easier for engineers to troubleshoot problems when they stood close to the cabinets, without having to open them up.

Two people involved in Lahore’s project helped bring the matter to the BBC’s attention and have asked to remain anonymous. One said that Huawei had never provided an app to make use of the wi-fi link, and added that the cabinets could already be managed remotely via the surveillance system’s main network.

CCTV cabinet
Image captionIt was suggested that a wi-fi link could have helped engineers troubleshoot problems without having to climb up and open the cabinets

A UK-based cyber-security expert said that it was not uncommon for equipment sellers to install extra gear to let them offer additional services at a later date.

But he added that the affair highlighted the benefit of oversight because if the authority had remained unaware of the cards’ existence, it could not have taken steps to manage any potential risk they posed.

“As soon as you give someone another method of remote connectivity you give them a method to attack it,” commented Alan Woodward.

“If you put a wi-fi card in then you’re potentially giving someone some other form of remote access to it. You might say it’s done for one purpose, but as soon as you do that it’s got the potential to be misused.”

There is no evidence that the cards created a vulnerability, and one of the sources involved confirmed that there had not been an opportunity to test if they could be exploited before the kit was removed.

‘Prompt response’

Lahore’s Safe City scheme was first announced in 2016 following a series of terrorist bombings.

It provides a vast surveillance network of cameras and other sensors, and a brand new communications system for the city’s emergency services

As part of the system, Huawei installed 1,800 CCTV cabinets, within which it placed the wi-fi modules behind other equipment.

CCTV cabinet
Image captionThe cards were placed among other equipment in the cabinets

The PSCA’s chief operating officer told the BBC that Huawei had been “prompt” in its response to a request to remove them and had fully “complied with our directions”.

“It is always [the] choice of the parties in a contract to finalise the technical details and modules as per their requirements and local conditions,” added Akbar Nasir Khan.

“PSCA denies that there are any threats to the security of the project [and the] system was continuously checked by our consultants, including reputed firms from [the] UK.”

Local concerns have been raised over the Safe City scheme after reports that images had been leaked and circulated via social media earlier this yearshowing couples travelling together in vehicles.

But there is no suggestion that this was related to Huawei’s involvement, and in any case the wi-fi modules would have been removed by this point. The PSCA has also denied anyone from its office had been involved.

Source: The BBC

01/04/2019

Huawei sales top $100bn despite US-led pressure

Person stands in front of Huawei logoImage copyrightGETTY IMAGES

Chinese telecoms giant Huawei said revenues topped $100bn in 2018 despite a US-led campaign against the business on fears it poses a security threat.

The firm said revenue for 2018 hit 721.2bn yuan ($107bn), while net profit jumped 25% to 59.3bn yuan.

The US and others have restricted the company over concerns that its ties to Beijing represent a security threat.

Huawei says it is independent and strongly denies its products pose a security risk.

The Shenzhen-based firm said global revenue surged 19.5% in 2018, its fastest pace of growth in two years. The result was supported by strong sales of smartphones in China.

At the same time its carrier business, which sells telecoms infrastructure to countries around the world, eased 1.3%.

Huawei is the world’s largest maker of telecoms equipment. It faces a growing backlash from Western countries on concerns over the security of its products used in next-generation 5G mobile networks.

The US, Australia and New Zealand have all blocked local firms from using Huawei to provide the technology for their 5G networks.

Several European telecoms operators are considering removing Huawei equipment from their networks, and a report by UK cyber authorities out this week strongly criticised the tech firm.

The report, issued by the National Cyber Security Centre, said it can provide “only limited assurance that the long-term security risks can be managed in the Huawei equipment currently deployed in the UK”.

Huawei has begun pushing back. It has launched a more aggressive strategy in recent months to counter what it sees as an American “smear” campaign.

Earlier this month, it filed a lawsuit against the US government over a ban that restricts federal agencies from using its products, arguing it is “unconstitutional.”

26/03/2019

Chinese smartphone firms jazz up products, seize turf in home market from Apple

SHANGHAI (Reuters) – Smartphone retailers in China say it’s a tough sell of late with consumers reluctant to upgrade, put off by chill economic winds.

Even so domestic brands led by Huawei have made big strides, wooing consumers with top-notch hardware and innovative features as they move upmarket in the $500-$800 price range. The result: a loss of share in a key segment for Apple Inc and fresh price cuts for iPhones by Chinese retailers.

“Of those people who are upgrading, there are many switching from Apple to Chinese brands but very few switching from Chinese brands to Apple,” said Jiang Ning, who manages a Xiaomi store in the northern province of Shandong.

Huawei Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo once sought to grab share in the world’s biggest smartphone market with value-for-money devices, but consumer demand for better phones has prompted strategic rethinks.

“People are more attached to their phone than ever and have higher expectations for the function and experience it offers. The response has been constant upgrading of hardware specs,” Alen Wu, global vice president at Oppo, told Reuters.

He Fan, CEO of Huishoubao which buys and resells used phones, said he has seen a consumer shift to Huawei from Apple, driven by the Chinese love of selfies and emphasis on camera quality. Huawei has had a tie-up with German camera maker Leica since 2016.

“Huawei’s cameras have become noticeably better than Apple’s in that they suit the tastes of Chinese consumers more,” he said.

Compared to dual-cameras common in most smartphones, Huawei’s P20 Pro device boasts three rear-facing cameras, with the additional one improving zoom capabilities.

It is one of several new devices in its P20 and Mate 20 lines, which helped Huawei’s share of the $500-$800 segment in China surge to 26.6 percent last year from 8.8 percent, data from research firm Counterpoint shows.

Apple, by contrast, saw its share of the segment tumble to 54.6 percent from 81.2 percent, also hurt by its decision to move even further upmarket with the iPhone X series.

“Most Chinese smartphone buyers are not ready to shell out beyond $1,000 for a phone,” said Neil Shah, research director at Counterpoint. “This left a gap in the below-$800 segment, which Chinese vendors grabbed with both hands.”

Shipments of phones priced above $600 in China grew 10 percent in 2018, data from research firm Canalys shows. By contrast, the overall market shrunk 14 percent, marking a second year of contraction.

OVERSEAS GAINS

The weaker cachet for Apple in China was underscored this month when several major retailers simultaneously cut iPhone prices for a second time this year.

A 64GB iPhone 8 sold at Suning.com Co Ltd now costs 3,899 yuan ($580), roughly 25 percent less than it did in December. That’s also lower than its $599 price tag in the United States, where iPhones typically cost less to buy than in China. Most iPhone models through to the iPhone 8 series have seen prices in China cut, albeit not equally.

In earnings too, it seems to be a tale of divergent fortunes. Apple’s October-December revenue from the Greater China region fell by about a quarter from a year earlier. Greater China currently accounts for 15.6 percent of its overall revenue.

Huawei, the world’s No. 2 smartphone maker, has estimated revenue for 2018 rose 21 percent, which analysts attribute in large part to robust smartphone sales.

More broadly, fewer sales for Apple means fewer customers for its App Store and media streaming services. The shift to higher-end phones by Chinese brands has also meant greater inroads in overseas markets.

Huawei’s shipments in Europe jumped 55 percent in the latest quarter and it now has 23.6 percent market share, according to Canalys. That’s not far behind Samsung Electronics and Apple which saw small declines in shipments.

OPPO, VIVO

If Huawei is taking the lion’s share of turf that Apple once had in China, Oppo and Vivo – brands owned by electronics hardware conglomerate BBK – are the newest threats.

In June, Vivo launched the Nex which starts from 3,898 yuan ($610) and in July, Oppo launched the Find X, priced at 4,999 yuan ($755).

The models mark the first time the brands have priced a phone above $600, a sharp departure from their roots selling $300-$500 models to young consumers in second-tier cities.

The devices came with features unavailable in the iPhone, including under-the-glass fingerprint sensors and “notchless” displays, both of which increase the size of usable screen.

Xiaomi too is going upmarket, announcing in January it would split off its low-budget Redmi range of phones into a sub-brand. In doing so, it is taking a leaf out of Huawei’s book which has for years sold cheaper devices under the Honor brand, helping differentiate its products.

Redmi will target international markets and e-commerce sales, while the flagship Xiaomi brand will target China and offline retail markets, company founder Lei Jun told reporters.

Last month, Xiaomi unveiled the Mi 9, its latest flagship device with a price tag of 2,999 yuan ($450). But the company also said it might be the last time a Xiaomi flagship phone would be priced under 3,000 yuan.

“Xiaomi’s flagship series phones were once always set at 1,999 yuan,” said Lei. “This was a contributing factor to our rise, but it also became an obstacle to our growth,” he said.
Source: Reuters
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