US ban on Huawei not to hit Vietnam hard: report

By Phuong Dong   May 29, 2019 | 02:40 am PT
US ban on Huawei not to hit Vietnam hard: report
Huawei accounts for only 4 percent of Vietnam's smartphone market. Photo by Reuters/Eric Gaillard
Vietnamese retailers will not be affected too much by the U.S. ban on Huawei, a major stock brokerage says.

The Chinese technology company’s smartphone market share in Vietnam is small, VnDirect said in a report.

The U.S. on May 17 blacklisted Huawei after accusing it of aiding Beijing in espionage, cutting it off from the U.S. software and components it needs to make its products.

VnDirect said Huawei only had a 4 percent market share in Vietnam last year, and Vietnamese customers could easily switch to other mid-range brands such as Oppo, Xiaomi and Nokia.

For this reason, major retailers such as Mobile World and FPT Digital Retail would not be severely hit by the ban, it said.

But they would have to deal with the remaining inventory as Huawei phones account for 6 percent of Mobile World’s revenues and 4 percent of FPT Digital Retail’s, it said.

VnDirect proposed three scenarios. In the best case, Huawei will join hands with the retailers to lower prices and offer promotions to liquidate the inventories.

Huawei could buy the inventories from them like Samsung did in the case of its faulty Galaxy Note 7.

In the worst case, if President Donald Trump’s ban on Huawei persists and the Chinese firm does not cooperate, Mobile World and FPT Digital Retail will have to write off inventories of VND110 billion ($4.7 million) and VND40 billion ($1.7 million).

This is equivalent to only 3.8 percent and 11.5 percent of the two retailers’ net profit last year, according to the report.

Mobile World and FPT Digital Retail are waiting for a response from Huawei, it said.

One popular retailer’s gain could however be directly proportional to their discomfiture. Digiworld does not sell Huawei phones, only Nokia and Xiaomi, which are expected to become more sought-after now, the report said.

Huawei users expressed concern after Google said last week that it would suspend business ties with the Chinese firm.

They flocked to online forums and social media looking for answers on whether their Android-powered phones would still be able to access Google services like Google Maps, Gmail and YouTube.

VnDirect estimated Samsung to be the largest smartphone brand in Vietnam last year with a 41.1 percent market share, followed by Oppo with 22.7 percent. Apple was the third largest with 8.6 percent and Xiaomi fourth with 6 percent.

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