Huawei: 5G, Espionage and Diplomacy

By Bria Hampson


Perhaps one of the most interesting business topics of conversation currently in circulation is the question of Huawei. The Chinese multinational technology giant is currently the top smartphone provider in the second quarter of 2020 after Apple and Samsung suffered from the COVID-19 pandemic; whilst Huawei smartphones sales fell by 5%, Samsung sales fell by 30%. Despite the clear success of the company with its dominance in China, internationally the company has been less than well-received.

HUAWEI AND 5G

The problem is 5G. This is the new generation of internet technology which promises greater download speeds and a wider bandwidth which will allow not only mobile phones but laptops and PCs to use the network. Huawei has been developing its 5G technology from 2009 and announced an investment of $1.4 billion into its research and development of 5G products. In 2019, Huawei launched the 5G Router and counterpart mobiles devices (such as the P40 Pro 5G), resulting in a 60% share of the 5G smartphone market. Network operators such as EE, Vodaphone and BT all use Huawei’s 5G technology, however, with new legislation this is set to change.

The UK Government has announced that Huawei 5G kits must be removed by 2027 and that mobile providers will be banned from buying Huawei 5G equipment after the end of 2020 (31st December). Sanctions from Washington which claim that Huawei 5G poses a national security threat encouraged the announcement from the UK. The national security threat claims include that there are “cells” in every major Chinese enterprise who are answerable to the Chinese Communist Party. They are allegedly tasked with gathering information in their respective countries. The claim of espionage has followed Huawei and their international presence, with the latest ban on 5G technology being a clear indication that Chinese business is not trusted. Whilst they are just claims, they have certainly impacted national policy.

INTERNATIONAL FUTURE OF HUAWEI

The future of Huawei 5G is non-existent in the UK, with a severe crackdown on all of their 5G technology beginning this year. However, Huawei 2G, 3G and 4G are still sanctioned in the UK and will still be used by telecommunication companies. Also, Huawei’s smartphone lead implies that there will still be growth for the company internationally. Huawei will remain firmly on the technology stage, but a fall in sales of Huawei products long term should be anticipated due to the 5G ban in the UK and the 5G and other product bans in the U.S, Japan, Australia and New Zealand.

THE IMPACT

After the announcement of the Huawei 5G ban in the UK, the Chinese ambassador in London, Liu Xiaoming, has warned that Britain will ‘have to bear the consequences’. In terms of relations between the UK and China, it is unclear what effect the Huawei 5G ban will have. Yet, when considering this somewhat hostile statement and the bellicose arrest of two Canadians in China in response to the arrest of Meng Wanzhou- Huawei’s CFO- in Canada, the Chinese government’s standpoint regarding the UK may have been affected.

International UK based firms will inevitably continue to advise Chinese companies at home and abroad meaning a greater vista on Chinese foreign policy and UK legislation (such as the 5G ban) will be necessary.

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