Chinese mobile giant Huawei's smartphone business could benefit from a swell of domestic patriotism thanks to a US campaign to block sales of its products overseas.
According to Canalys market research firm, Huawei Q2 smartphone sales in China increased 31% compared to the same three months last year. The Chinese company shipped 37.3 million units, giving it 38.2% market share in China.
With the same measure, Apple continued, which is scheduled to report earnings later today, as sales in Q2 in China fell 14% to 5.7 million units, according to Canalys. It continues a tough stretch for Apple in China, a once-promising tech giant market that has been disappointing in recent years.
Apple was not alone, as overall smartphone shipments in China fell 6% during the quarter, and other major Chinese suppliers ̵
Earlier this year, the United States placed Huawei on a blacklist for trade, insisting that the 5G network equipment posed a security risk due to the company's ties to China's central government. More generally, US officials have pushed allies to block Huawei sales as well – though they have so far had only limited success.
Canalys notes that this effort may have slowed the company's momentum in other markets, such as Europe. But Chinese consumers seem to rally behind the company, motivated by both patriotism and the company's advanced technology.
"The American trade war also creates new opportunities," said Canalys analyst Mo Jia in a statement. "Huawei's retail partners are rolling out advertisements to associate Huawei with being the patriotic choice, to appeal to a growing demographic of Chinese consumers willing to take political factors into consideration when making a purchase decision."
The Canalys report came out just as Huawei reported that Q2 revenue increased 23% compared to Q2 2018.
"Revenues grew rapidly through May," Chairman Liang Hua said in a statement. "Given the foundation we laid in the first half, we continue to see growth even after we were added to the unit list. That is not to say that we have no difficulties going forward. We do, and they can affect the pace of our growth in the short term. But we want to keep going. "
For Huawei, growth in China seemed to offset potential inertia as a result of the trade war. Globally, Huawei's smartphone sales grew at a 24% pace. % of smartphones Huawei shipped in Q2 in China, the highest percentage since 2013.
In recent years, Huawei has been aggressively pushing to expand outside the domestic market, especially in Europe, although it has met with mixed results.
Even While the latest figures may provide some relief, Huawei still faces difficulties. Relationships with Google and the Android operating system are still uncertain, and officials have said the ban could still have significant financial implications sequences for the company down the road.