China’s Huawei To Expand Across Russia With 50 New Stores

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Chinese tech giant Huawei plans to expand its sales operation in Russia by opening 50 new stores across the country in 2021, the company said on Monday.

“In 2021, Huawei will continue to develop its retail network and will additionally open 50 branded stores in major Russian cities: St. Petersburg, Yekaterinburg, Krasnodar, Krasnoyarsk, Vladivostok and others” the company statement said.

The communication giant said it will also boost its customer service capabilities in the country by offering service from official partners directly at branded points of sale. At the same time, users can send the device to a service center directly from any official store, Huawei explained.

All the new stores will offer the entire range of Huawei products in line with the ‘1+8+N’ devices ecosystem, which includes smartphones, laptops, wearable gadgets and more. The company currently has 18 stores in the country, with the first opening in Moscow in 2018.

Online smartphone sales in Russia grew by more than 56% YoY during Q2 2020, according to the latest research by Counterpoint Research Model Sales Tracker June 2020. The total online smartphone market share reached its highest ever at 32% during Q2 2020. The increase in online channel sales is due to the shift in consumer behaviour, upgrade of devices to work from home smoothly and the availability of popular smartphones on online platforms. After the restoration of normalcy in retail operations, online smartphone sales will stabilize while competition will increase among online smartphone platforms. The Covid-19 pandemic has had a huge impact on the Russian smartphone market. After seeing a record decline in April, it bounced back in May. Top five smartphone brands — Huawei, Samsung, Xiaomi, Apple and OPPO — accounted for 86% of the total smartphone market during this quarter.

Huawei has dramatically ramped up investment in Russia due to US restrictions against the tech giant, CEO Ren Zhengfei has said. “After the United States included us in the Entity List, we transferred our investment in the United States to Russia, increased Russian investment, and have expanded our Russian science team” Ren said in a speech to Chinese universities last month.

Huawei began to relocate its US operations to Russia after an agreement was signed between China’s President Xi Jinping and his Russian counterpart Vladimir Putin at the 2019 St Petersburg International Economic Forum. We commented on the implications of that meeting in this article here.

Ren’s comments follow remarks made by Sergei Lavrov, Russia’s Foreign Minister last week that Russia remains interested in working with China and Huawei on 5G internet technology, and has no intention of “following the example” of the US, “who simply demand that we don’t cooperate on 5G with China and, in particular, with Huawei.”

Huawei currently employs around 900 staff in Russia, an increase of 300 over the past 12 months. It has four research and development (R&D) centres in Russia and plans to hire 1,000 more R&D staff by 2024.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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