Huawei Has Defied Trump’s Blacklist: So What Happens Now?
Zak Doffman Contributor, Cybersecurity
Back in May, when U.S. President Trump stripped Huawei of its U.S. supply chain, the company’s short to medium term future looked bleak. The blacklist was aimed at 5G networking equipment, but it was Huawei’s consumer goods business that seemed to be hit hardest. Huawei execs forecast billions in lost revenue as CEO Ren Zhengfei talked survival: “It's good enough for us to just survive,” he told Bloomberg in May, “you can come back to interview us in two or three years and see if we still exist.”
Fast forward six months, though, and it’s all change. “Huawei defies the odds to lead the global telecoms market after 180 days on the U.S. trade blacklist,” announced a South China Morning Post headline on November 8. “Performance,” it reported, “that has defied early predictions that it would stumble under the U.S. trade ban.” And this isn’t a slant on the truth—with this story, there are no rose-tinted spectacles in sight.
Far from losing the hard-fought number two slot for global smartphone sales it won from Apple last year, Huawei has continued to grow, leaving Apple further behind and chasing down Samsung for the global crown. This year, the blacklisted company has shipped 200 million smartphones 64 days faster than it managed in 2018—pre-blacklist. Huawei targeted 2020 as the year it would overtake Samsung. It remains on course to do exactly that. Samsung is no slouch—according to Canalys it posted annualised growth of 11% in the third quarter this year—Huawei, though, hit 33%.
So all good on the consumer front, but what about sales of 5G networking equipment. Well, despite the blacklist, Huawei still leads the world. In the first quarter of 2019, despite a relentless U.S. campaign against the company, Huawei’s market share was 28%. During the following quarter in which the blacklist was put in place, this increased to 29%. Second-placed Nokia remained a distance behind, at around 16%.
Worse for the U.S., Reuters reported that half of Huawei’s 65+ 5G contracts are in Europe—the primary international battleground between Washington politicians and Shenzhen execs. A recent EU report warned of the dangers associated with a dominant 5G player from an authoritarian regime. But the two key battlegrounds, Germany and the U.K., remain undecided and could still opt for Huawei. If that happens, it is likely that other markets around the world will follow suit. If key markets, especially the U.K., allow Huawei into their networks, it undermines the U.S. case considerably.
So what went wrong with the U.S. campaign? In a word—China. Huawei’s domestic market has pulled hard enough to make all the difference. Huawei’s overall growth was strong, but its performance in China was exceptional—a 66% increase catapulting the company to a 42% market share. The company is chasing down an extraordinary 50% market share of the world’s largest smartphone market—a market that has been a recent nightmare for both Apple and Samsung as they struggle to compete. Huawei eased past the $100 billion revenue mark last year for the first time, after a decade of uninterrupted growth. Against the odds, it looks set to do the same this year.
There are three allegations behind the U.S. campaign against Huawei. The first that the company will facilitate espionage or data theft at the behest of China’s intelligence agencies if asked. The second that the company receives state subsidies at the expense of non-Chinese competitors. And the third that its technologies have been used to help suppress China’s ethnic minorities, most notably the Uighurs in Xinjiang.
Underpinning Huawei’s defense against U.S. claims has been a carefully orchestrated media campaign that was underway before the sanctions were in place. Back in February, at the flagship Mobile World Congress event in Barcelona, Huawei hit back at the U.S. in front of its industry peers. The company’s chairman Guo Ping used a keynote speech to remind the world about the cybersecurity controversies emanating from the U.S. entered around the Edward Snowden revelations. As I wrote at the time, the approach has “all the hallmarks of a carefully orchestrated line of defense that has been in the works for some time—and it’s a very good one.”
In short, that campaign hasn’t stopped since. We have seen a new transparency from Shenzhen, open access to the once reclusive CEO, an open-door policy at HQ, a growing team of Western media and PR professionals drafted in to shape the messages and manage the media. And those messages have focused on innovation, investment, legacy, history and performance. All underpinned by trust, loyalty and consistent denials of any security wrongdoing.
Behind all this has been a darker message, though. Essentially Huawei is offering the world a choice. Take the U.S. line, swallow its tech dominance through the likes of Google, Apple, Microsoft, Amazon, Facebook and Qualcomm. Or push back, don’t take it all at face value, and support this leading non-U.S. player as it carves out a new way. The messaging around a replacement for Android itself or a replacement for Google Mobile Services aligns with this. The world’s consumers don’t want to move from Google, but in truth no company has offered them a viable alternative in a decade.
Huawei has ridden out the storm. Between its 5G contracts and its smartphone market position it is well protected for another 12-18 months, with perhaps another 10% market share in China on offer to offset any slowing non-China sales. Beyond that, there are one of two paths open to the company. Either Google (and the others) will be returned under Commerce Department licenses, in which case the company will be even stronger, even more of a threat to its competition. Or the blacklist will hold, in which case the company will invest in Huawei Mobile Services and in an app ecosystem to wean millions to its new third way.
Unless there is a significant change in the U.S. stance, this analysis on Huawei will continue back and forth. And the more the company is seen to ride out its sanctions, the more likely the U.S. will trade away more restrictions for trade talk benefits while they still carry some weight. Meanwhile, behind the scenes, U.S. tech giants continue to lobby for a return to business as usual. What is certain, is that there was no expectation that Huawei would field the first six months of its blacklist as well as it has. For the U.S. to campaign this strongly against a commercial enterprise is unprecedented—the result of that campaign, though, is arguably even more so.
Huawei pays staff mega 'dedication' bonus for resisting Trump
Payout is latest initiative by China's biggest telecoms firm to counter US pressure
MARRIAN ZHOU, Nikkei staff writer
NOVEMBER 12, 2019 13:19 JST
Huawei Founder Ren Zhengfei gestures as he chats with Huawei executives at the company campus in Shenzhen, China. The Chinese telecom giant on Monday said it will double employees' October salaries. © AP
LOS ANGELES -- Huawei Technologies, the world's largest telecoms equipment maker, will double staff salaries in October to thank its over 190,000 employees for enduring the Trump administration's blacklisting of the Chinese company for allegedly spying on behalf of Beijing.
"In 2019, the company and all employees were, and are, facing extraordinarily external challenges," said an internal message to staff obtained by the Nikkei Asian Review. "Upon approval by the company's president, a special dedication award will be paid."
The bonus, which is the latest step taken by Huawei to shore-up its image at home and abroad as Washington has cracked down on the company, will be distributed to all active employees of Huawei and its direct subsidiaries with a performance rating above C and no information security violations, the memo said. The bonus will be equal to each staff member's base October salary.
Huawei, which is the world's second biggest smartphone manufacturer, has become a focal point in the dispute between the world's two biggest economies as they jostle for global economic, financial, military and technological supremacy. Washington alleges that Huawei collects information for Beijing, allegations that Huawei has consistently denied.
With 194,000 employees spread across 170 countries, and over $105 billion of annual revenues, the company has spared no effort in its attempts to try and protect its brand from the Washington onslaught, which has centered on a ban of its use of U.S. technology.
The U.S. crackdown, which Huawei has said would cost its overall business around $10 billion in sales this year, has prompted the company to redeploy senior executives and scientists who have U.S. links due to growing concern that they could be co-opted by American agents and leak confidential data.
Company recruiters have also approached senior journalists from several foreign media companies such as Reuters, Bloomberg and U.S. newspapers, with offers of pay packages in excess of $200,000 for public relations director roles, Nikkei Asian Review has learned.
In addition, Chinese media have reported that Huawei engineers would receive an additional bonus of around $2,000. Huawei had not responded to a request for comment at the time of publication.
Huawei's decision to award the special bonuses was timed to top up employee bank accounts following "Singles Day," a marketing concept developed by Chinese internet commerce giant Alibaba that resembles Black Friday or Cyber Monday in the U.S.
Also known as "Double Eleven," the shopping extravaganza, which racked up more than $38 billion of sales on Monday, derives its name the date November 11, where the four ones symbolize being single and not being in a relationship.
Huawei's scale and domination of the 5G technology that is the backbone of next-generation mobile communications networks and artificial intelligence applications, have long been a U.S. concern.
Huawei, which is not publicly listed, has embarked on a public relations and legal offensive to counter Washington's lobbying of allies to not use Huawei equipment when building fifth-generation (5G) mobile networks, citing a 2017 Chinese law that requires national companies to cooperate with national intelligence work.
Founder and Chief Executive Ren Zhengfei has said Huawei has never, and will never share data with China's government.
As part of its efforts to attract talented staff and achieve technological self-sufficiency, senior Huawei executives regularly broadcast that they want to recruit "young geniuses" from around the world, actively publicizing that new hires with doctorates can receive salary packages this year as high as 2 million yuan ($281,000), more than Google or Apple offer.
"We can find mathematicians in Russia, scientists from Europe... if we can't from the U.S.," Huawei's founder and chief executive Ren Zhengfei said in a September news conference at the company's headquarters in Shenzhen.
Despite the U.S. technology ban, sales for Huawei, which means "China Can Make It," have continued to soar. But not all of its initiatives have been successful. This year, the growth rate of its home city Schenzen has fallen to its slowest level in 40 years, underlining the impact of the Washington's actions against the company and China more broadly.
Trump said he would intervene ‘if I think it’s good for the country’
A Canadian court has granted bail to Sabrina Meng Wanzhou while she awaits an extradition hearing
https://www.scmp.com/news/china/diploma ... fo-sabrina
So first Trump issues an arrest warrant and asks another country to arrest her and extradite her to the US. Then after she is arrested Trump says he would intervene if it helped him get a trade deal. Was there a crime to begin with or is a trade deal more important than the rule of law? This is about US business interests nothing else.
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