Chinese Telecommunication Giant Huawei is locked in a tussle with the US government over allegations that it is secretly spying on its customers on behalf of the Chinese government, allegations that the company is vehemently denying. Meng Wanzhou, the Chief Financial Officer of Huawei, has been arrested by Canadian police at the request of the American government and subsequently charged bank and wire fraud to violate American sanctions against Iran, for which she has already appeared at a Vancouver court on the 8th of May. As the international media is closing following the story of how the battle between America and Huawei is going let’s focus on what made Huawei into a global powerhouse and what lies next for the company.
The founder of Huawei, Ren Zhengfei was a Chinese army technician before he started the company with just a small investment of $5000. His daughter is Meng Wanzhou, who is at the center of the latest controversy in the titanic tug-of-war between China and the United States of America for world technological supremacy.
The company was founded in 1987 in the southern Chinese city of Shenzhen, but now, after 32 years of being in operation, the privately-held Huawei is a global technology giant and is currently the world’s largest producer of telecommunications networking equipment. Huawei is also the number-two supplier of smartphones, just trailing behind Samsung but miles ahead of Apple. The company has almost 190,000 permanent employees and has operations in 170 countries. It reported a revenue figure that is north of $100 billion in 2018.
Huawei’s equipment forms the backbone for most of the telecom networks that are tasked with carrying much of the data and communications traffic generated by our world.
Huawei is currently leading the charge in the deployment of the latest 5G telecommunication infrastructure in Europe and Asia, and its steady geographic expansion has meant that it continues to undertake heavy investment in research to further improve the development of the hyper-fast 5G networks.
The decades of research into 5G has meant that Huawei is now the world’s most advanced company and has the cheapest 5G capacities in the world. So, how has the company risen to such mammoth proportions? While some say that it had active support from the Chinese government, another case can be made that Huawei happened to be at the right place at the right time. The company was founded at a pivotal moment in Chinese history when the country was towards becoming a manufacturing hub of the world. This helped the company to rise faster and transform itself into a global powerhouse. Huawei is one of the biggest examples of China’s industrial miracle.
As the company started gaining huge revenues in China, it quickly ventured into overseas markets at the start of 1997, targeting underdeveloped nations in the Southeast Asian, Eastern European and African markets that were largely ignored by global players at that moment. This strategy helped them to rapidly gain market share and allowed them to use their massive revenues into R&D efforts and developing new products. But the rise of Huawei meant that the US started following the company in a closer capacity as they had concerns that the one-party government in China is using Huawei as a tool to launch espionage and cyber-attacks.
At the start of Donald Trump’s presidency, he started a trade war with China over intellectual property theft and lopsided policies that are helping the Chinese over their American counterparts. It turned ugly and now it has turned into a tech war when the US barred Huawei from operating in the US market.
The American government has just announced fresh tariffs on $300 billion worth of Chinese goods. Huawei is currently trying desperately to secure the release of their CFO, and with no end in sight to the US-China trade war, things are about to turn more ugly before a resolution can be reached by both parties.