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Thu, 21 Nov 2019 00:47 GMT

The West Turns Its Back On Huawei


Benjamin Schmidt

Fri, 07 Dec 2018 19:14 GMT

Take an evening stroll in Paris along the Seine near the famous Cathedral of Notre Dame this week and you won’t be able to miss the illuminated, building-sized advertisement for the Huawei Mate 20 Pro smartphone on the north side of the river. Similar - albeit smaller - adverts for the Chinese tech firm’s new premium handset can also be found dotted around London and other European cities at bus stops and in metro stations.

But the company's recent successes, becoming the world's largest supplier of telecommunications network equipment and displacing Apple as the world's second largest seller of smartphones have been heavily blunted this week. The biggest shock came with the arrest of Meng Wanzhou, Huawei’s chief financial officer and a daughter of its founder, last Saturday, December 1st, in Canada.

Meng's arrest was ordered by US authorities and said to be connected to an investigation of violations of US trade sanctions, according to information collected by Reuters. According to China's foreign ministry, neither the United States nor Canada have explained the reasons for the arrest.

The arrest is just the latest move against Huawei this year. Western intelligence services have suspected Huawei might be involved in Chinese espionage for years and Western politicians have become increasingly wary of the company. In August, Australia banned Huawei from building the country's 5G network, even though half the country's current broadband infrastructure relies on Huawei technology. In October, New Zealand followed suit. In the US market, Huawei has been effectively banned since 2012.

The US ramped up its efforts to counter the firm’s progress on December 5th when it began openly discouraging its allies from purchasing equipment from Huawei. That effort may be partly responsible for the announcements this week by Japan and Britain's BT to halt purchases from the firm.

The turn against Huawei has become a symbol of the ongoing struggle between China and the United States in trade, technology and geopolitics. Over the past two years, China has ramped up its cyber espionage and theft of intellectual property in the US and in other advanced countries, a trend that analysts say is partly to blame for the trade war. The two countries are also locked in a contest for leadership in future technologies like supercomputing, artificial intelligence and 5G mobile Internet.  

The New York Times reported this week that for many people in China, the contest feels not merely commercial, but civilizational. If China succeeds, it will claim its rightful place as a superpower. “The Chinese government and Chinese companies must face these new circumstances, take up new countermeasures and get through this stage of crisis,” Fang Xingdong, the founder of ChinaLabs, a technology think tank in Beijing, told the New York Times on December 6th. “This is a necessary rite of passage for China’s global technological rise.”

In its success as a global telecommunications equipment supplier, Huawei's revenue's rose to $92 billion in 2017, up nearly 32% from 2016. Much of the company's business is conducted overseas, where the firm is a market leader in many European countries and across Asia and Africa. The company was founded in 1987 and remains privately owned. It describes itself as employee-owned but its ownership structure is largely unknown. It is based in the southern Chinese tech hub of Shenzhen and employs about 180,000 people.

US & Canada