And now Huawei’s troubles begin

Published in El Pais, May 28th 2019.

I have written a few articles in the past about Huawei’s problems with the United States. The company has constantly been accused of having close contact with the Chinese military, spying (or at least have set up a network that makes spying easier), defrauding investors and having the government illegally detaining Canadians in retaliation for Canada arresting their CFO. The US and Australian governments have already banned them from using their 5G network for security concerns and many more are considering following suit. Unfortunately for them their troubles seem far from over.

As if things cannot get any worse, the Trump administration just put the company on what is known as the “Entity List”, a blacklist that forbids American companies form doing business with them. Essentially many of the parts Huawei use to build their phones are no longer at their disposal, most importantly Google themselves says they will no longer let the phones use their Android operating system. Existing phones will receive security updates but will no longer have access to the play store. With the news phones that a week ago retailed for over $1000 are being sold for as little as $100

Does this mean the company hailed for its innovation in both phones and 5G network development is ruined? Maybe. For its part Huawei is focusing on becoming less reliant on US companies regardless on whether the ban is lifted and is also working on its own OS however the chances of these solutions working are slim. Finding other suppliers may be a temporary work around but having many companies not willing to sell to them will surely affect their competitiveness, not to mention Android’s OS is incredibly popular and to convince users to switch to theirs will be a tough sell regardless of how well it is designed.

Of course, this can all be a lot of white noise. Trump himself has already suggested he is willing to include Huawei in its negotiations with his trade war with China, plus China has a few tools at their disposal to get Huawei off this blacklist. The Chinese government itself is threatening to do the same to Apple which may force the US to reverse their decision.

Even if the ban is lifted, nationalistic pride may have already done irreparable damage as consumers from both countries already vow to never purchase the others product again. Whatever happens it will be interesting to see how this plays out as we may very well see a technological giant disintegrate.

About Matthew Glezos 244 Articles
Matthew is Canadian and has a Master in Business Administration. He has international experience in marketing and strategy. He has a strong interest in technology and combines it with the business side.

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