Huawei coping fine with US trade ban, but urges need for open collaboration

Chinese vendor has yet to see significant impact from the trade conflict and expects to ship between 240 million and 250 million smartphones this year, but still supports globalisation and long-term collaboration with US suppliers, says its founder Ren Zhengfei.
Written by Eileen Yu, Senior Contributing Editor

Huawei has yet to see any significant impact from the China-US trade war, but it still prefers a long-term strategy of open collaboration and cooperation with US suppliers. That said, it is prepared to put in the necessary measures to ensure its business remains sustainable if the trade conflict drags on, according to the Chinese phone maker's CEO and founder Ren Zhengfei. 

Speaking at a panel discussion Wednesday at its headquarters in Shenzhen, Ren said Huawei was likely to ship between 240 million and 250 million smartphones this year. 

These estimates already were assessed on a "worst case scenario" basis as a result of the US trade war, he said, but noted that the next year would provide a clearer indication of any wider impact. If results remained positive, that would mean the company had been able to withstand the trade crisis, he added.

And should the conflict continue to drag on, Ren said Huawei was prepared to put in the necessary measures in future to ensure its business remained on a growth trajectory. The US sanctions, in fact, had compelled the company to work harder at developing its own technology, including its Harmony mobile OS

However, this was not its preferred long-term strategy, he said, noting that he would rather Huawei not have to develop and innovate everything on its own. 

His fellow panellists concurred, and urged the two nations to find a resolution quickly. 

Detlef Zuehlke, a professor of production automation and "spiritual father" of smart factory industry, said everyone benefitted from open borders and open markets, where consumers could choose to buy the best phone available that suits their needs. 

This would not be possible when borders were closed, Zuehlke said. 

Furthermore, it would be unwise for the Washington to "decouple" both markets as a way to slow down China's economy, said Kishore Mahbubani, founding dean of LKY School of National University of Singapore, who was the former president of UN Security Council.

Describing the move to place Huawei on the Entity List as a political decision, not technical, Mahbubani said this indicated the US government's belief that the Chinese economy was becoming too strong too rapidly and it needed to find ways to buffer its rise. 

However, given the journey China has taken to get to where it was now -- where its purchasing power surpassed that of the US -- he said it would be tough to imagine its economy could be taken down simply by putting companies such as Huawei on the Entity List

"They need to reconsider and ask themselves what will work [better]...isolating China or cooperating with China," he posed. He added that other countries, too, would not stand as bystanders and would instead assess what was in their best interests and not all would choose to walk away from Huawei. 

Furthermore, the US could gain some leverage on China if Chinese manufacturers needed technologies or components supplied by American companies, as Huawei did with Google's Android, he noted. In the long term, this could be a wiser position to take than one where China was forced to be solely reliant on its own technologies, he said.

Mahbubani acknowledged concerns about security should be addressed, but urged for these to be discussed openly and the need to establish a set of rules by which everyone could abide. 

Amidst allegations that Huawei is creating backdoors in its equipment for the Chinese government to gather intelligence, he pointed to how the US government had tapped phone conversations around the world. "So clearly, it isn't just [about] one super power spying [but] lots of powers are spying," he said. "At the end of the day, if that's the core issue, [then] frankly, the best way to resolve this is not to have a headlong clash between the US and China which is what's happening now. [Instead], we need to have a global discussion."

He called for multilateral rules to define what could and could not be used with a piece of technology, and the need then for every country including the US to abide by these rules.

Ren also underscored the importance of laws and regulations to safeguard information security, similar to laws against the use of counterfeit money to guarantee the safety of currencies. 

He noted that technology vendors alone also could not be blamed for all problems, just as car manufacturers could not be held responsible for all road accidents. 

And like cars, equipment makers such as Huawei could only ensure the safety of their products when these were sold, he said. Telecommunications operators also would have to safeguard connections, companies would have to manage the secured deployment of their networks, and governments should lay out the regulations to protect the ecosystem.

Zuehlke also noted the need to look at security holistically, across the entire technology stack including web browsers, software, and hardware. 

This would be increasingly important as the level of vulnerability grew, with the adoption of new technologies such as autonomous driving and telemedicine, he said. 

No US talks on 5G licence, yet

During the panel discussion, Ren revealed that Huawei currently was not in discussions with any US company regarding its proposal to licence its 5G networking technology. This would involve a one-off fee in exchange for access to the Chinese vendor's 5G chip designs, source codes, and expertise.

Given that significant of such a deal, any potential large US company would need time to review it before picking up a discussion with Huawei, he said. 

Should an interested party emerge and be willing to discuss the licencing deal, he added that Huawei would find an investment bank to help identify an intermediary to work on the deal, contract, and collaboration. However, this had yet to take place, he noted. 

According to Mahbubani, it was likely there soon would be a temporary truce between China and the US, driven primarily by political motivation on the part of US President Donald Trump, who was heading to the elections next year and would want to do so with a strong stock market.

Zuehlke further stressed that the ongoing tensions between the two countries, if allowed to drag on, also could pose a threat to the global economy. He noted that the other major 5G players -- Nokia and Ericsson -- would not be able to cope with anticipated global demand for 5G network equipment should more nations joined the US in banning Huawei. 


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