Tuesday October 15, 2019
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Huawei CEO Sees Little Impact on Sales from US Broadside

Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law

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FILE - Ren Zhengfei, founder and CEO of Huawei, gestures during a meeting with reporters in Shenzhen city, south China's Guangdong province, Jan. 15, 2019. VOA

Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law.

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies.

Trade, security issues

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

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FILE – Huawei’s Meng Wanzhou leaves her family home flanked by private security in Vancouver, British Columbia, May 8, 2019. VOA

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei.

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company.

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products.

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The Huawei founder said that the company would not be taking instructions from the U.S. government.

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system.

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.

Ren has previously said his daughter’s arrest was politically motivated. (VOA)

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Sagging Auto Sector Sales Show Signs of Revival on Account of Depreciation Benefits and Heavy Discounts

The market is yet to see the recovery mode set in

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Auto, Sales, Depreciation
New introductions have also been instrumental in the slight recovery in passenger car and two-wheeler sales in September 19 over August 19, while the YoY numbers indicate the extremely cold nature of the market. Pixabay

Sagging auto sector sales showed signs of revival in September on account of depreciation benefits and heavy discounts.

“Depreciation benefits and discounts have helped a little bit in increasing sales in September in comparison to August,” said Sridhar V., Partner, Grant Thornton India LLP.

“New introductions have also been instrumental in the slight recovery in passenger car and two-wheeler sales in September 19 over August 19, while the YoY numbers indicate the extremely cold nature of the market. The market is yet to see the recovery mode set in.”

Additionally, the immediate price reduction due to lowering of effective corporate tax rate to 25.17 per cent (inclusive of all cess and surcharges) from 30 per cent for all domestic companies has helped to deepen discounts and drive-in some extra sales numbers.

Auto, Sales, Depreciation
Depreciation benefits and discounts have helped a little bit in increasing sales in September in comparison to August. Pixabay

In August, Finance Minister Nirmala Sitharaman announced several measures to boost the sector, including lifting a ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles bought till March 2020 among others. The decisions are likely to sustain the trend for a few more months.

According to Fitch Ratings Associate Director Snehdeep Bohra, the recent interest rate cut and lower base effect will help stabilise the YoY auto sales in October.

“What is really important is to pass on the interest rate cut to the customers. New launches ahead of the festival season, including BS6 compliant versions, are also going to support the sales momentum,” said Bohra.

However, some industry insiders contend that mitigated decline in sales on a MoM basis has been caused due to wholesale adjustment, since dealerships were over-stocked for the last couple of months. Effectively meaning that the dealers stopped buying from OEMs to reduce the stock pile-up.

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The auto industry is facing a severe demand slowdown on account of high GST rates, farm distress, stagnant wages and liquidity constraints.

The sales and production have plunged dramatically, leading to job losses. In August, all major Original Equipment Manufacturers (OEMs) comprising passenger, commercial, two and three-wheeler manufacturers reported massive decline in domestic sales.

As per the Society of Indian Automobile Manufacturers’ (SIAM) August sales figures, the overall sectoral offtake in the domestic market plunged 23.55 per cent to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year. September sales results are awaited.

Moreover, the industry has estimated that around 15,000 contractual manufacturing jobs have been lost and another million are at risk if the slowdown is not reversed. (IANS)