The Chinese telecommunication manufacturer Huawei has experienced phenomenal growth in recent years. The company has even surpassed the traditional leader Apple in terms of phones sold and market share. The reason why you might have heard about the company recently could be for their premium quality smartphones and their good value for money products, but above all because of the recent drama between the manufacturer and The Trump administration. So, what is the reason for all the drama and what are the consequences?
The story began in May 2019 when the Trump administration accused Huawei to spy on countries and people through their phones. Even if there is no concrete proof yet, one of the main reasons for these accusations is the close relationship between Huawei and the Chinese government, and the fact that Huawei was giving personal data to the Chinese government. According to these accusations, the Trump administration decided to blacklist the brand in the US. This blacklist led to ban US companies from cooperating with the Chinese brand. But is it the real and only reason for this boycott?
Huawei is one of these new Chinese brands like Xiaomi or Honor which has taken an important place in the market. These brands are a way for China to compete with the US in international trade. With these brands, China shows that the country is not just a manufacturer but also has evolved as a producer and exporter of smart technology products that can now compete with US traditional brands. This is also a way for China to increase its soft power with these brands becoming more and more popular over the world.
But more than just an ego war between Trump and China, these political decisions are especially a way for Trump to protect the US market and to impede Huawei’s economic growth. The high technology industry is one of the strategic points of the US economy. To give you an idea of how important these companies are, Apple is worth more than the CAC 40 -The 40 biggest French companies-. But Huawei is now taking huge market share on the US market. With flagship killer products, Huawei can now compete with expensive Apple or Samsung phones but are way less expensive, which is a huge competitive advantage for the Chinese brand.
One way to keep this advantage was for Trump to use his political power to weaken Huawei. By imposing a Blacklist, the US brand can no longer do business with Huawei. This is a huge sanction because Huawei is currently using US Kirin chipsets -electronic component- but also US software like Android, and Google services like YouTube, Gmail etc. These services are important because they are essential to most of the customers who are now used to these services and they will not choose a smartphone without the Google services. Huawei has 1 year to find alternatives before the ban takes full effect. One of the alternatives is their new OS “harmony OS”. They even already launched a new phone without any Google services, but the company might have trouble finding buyers in the US and in Europe.
5G is also a huge contemporary issue and subject of debate. The first company/country that implements it will have a huge advantage and this is again a rivalry between China and the US about who will be the biggest on this market.
To conclude, this conflict may appear to be a political conflict over privacy and Huawei spying on users, but it might result in a more complex economic war between the two superpowers. These restrictions are a way for the Trump administration to slow down the expansion of the Chinese brand but also to show that the US is still the world’s leading economic and politic superpower.
Jocelyn.M
Sources :
https://www.androidauthority.com/huawei-google-android-ban-988382/
https://www.archyde.com/apple-is-worth-more-than-all-the-cac-40-groups-combined/
https://apnews.com/article/be4f58860b584eac90226c3ae4c6c43a
https://www.theguardian.com/technology/2019/aug/30/huawei-mate-30-google-what-does-it-mean
Hi Jocelyn, thanks for your article. The content is very interesting and the subject very topical !
ReplyDeleteI think that it is a great example which cleary illustrate the US vs. China conflict. Huawei seems to find solution easily in response to Trump threats. However, you do not mention the Chinese government action to avoid this ban. As you said, Huawei has close relations with the Chinese government but don't you think China is supposed to protect its companies? I mean, does China for example already decided to stop producing US smartphones components?
Thanks !
Hello Jocelyn , thank you for your article.
ReplyDeleteI found your article very interesting , i have already heard about this conflict and i learnt more things by reading your content.
In my own case , i have a Huawei smartphone and i can tell you that the value for money is simply amazing . However, it uses Android Os and all the Google features and i'm used to it so i don't know if i could change for another OS even though Huawei has some good points in sofware. Consequently ,do you think that Chinese softwares could one day compete with American ones ? And if it's the case , do you think european users could get rid of their habits of using US softwares and applications only to get a cheaper smartphone ?
Thank you in advance for your answer !