Huawei is the world leader in telecommunications infrastructure. This means that the company has the widest coverage of antennas, cables and equipment transmitting and receiving mobile internet signals, something especially valuable with the beginning of the implementation of 5G, the new generation of mobile connectivity, worldwide.
The Chinese giant, however, faces not only competition from other companies in the industry, but also a political rivalry with the United States government, which prohibits much of the company’s activity in its territory and also pressures allies to not make deals with Huawei. But, after all, what is weighing against the Chinese in this conflict? Should countries that maintain trade relations with the U.S. give in to pressure and put aside any negotiations with Huawei?
Between finger-pointing and real risks
The list of accusations against Huawei is neither short nor recent. The company is suspected of allowing vulnerabilities in its own networks to allow international espionage at the behest of the Chinese government, in addition to stealing patents and industrial secrets from Western rivals and circumventing commercial bans.
In other words, the U.S. fight with the company goes beyond the existing one against China itself, which involves taxes on raw materials and should still last a long time, even with signs of trade agreements. And another important topic arises in this question: after all, is there evidence that China did in fact use the company as a spying channel?
At least for now, nothing that actually proves Huawei’s participation in these practices, or that shows that its equipment allows information to be intercepted by Chinese authorities, has been publicly disclosed. The only apparent evidence is documents obtained by Reuters, which would prove that Huawei sold products of American origin to operators in Iran – something at odds with U.S. sanctions against the country.
The US government says it has shared more specific information about the accusations with the United Kingdom and Germany in an attempt to convince allies not to let Huawei operate their telecommunications sector. However, both saw no problem in integrating the Chinese company into their 5G negotiations – with restricted access to networks and parallel development of security procedures, such as encryption and constant monitoring. In other words, they were not intimidated by the Americans’ pressure and practically assessed the situation.
The counterattacks of the company are still weighing against the Americans. In February, the company rejected new accusations published by The Wall Street Journal and, in response, stated that it is the United States itself that has a history of accessing other countries’ infrastructure for spying – something proven by Edward Snowden‘s complaints in 2013 involving the National Security Agency (NSA), for example.
Thing is, while it is not possible to fully rely on the company’s response, the lack of transparency by the U.S. does not help to fully clarify the situation.
The other battlefront
The trade war against Huawei is not just about the 5G markets. In fact, the sector in which the manufacturer will most suffer losses is that of mobile devices, more precisely in cell phones. As part of the banning of deals involving US and Chinese companies, the brand has been banned from using Google‘s app ecosystem on its devices. In addition, the supply of parts and other components from US companies has also been cut.
Huawei even has a homemade solution under development, called the Harmony OS, but for now it has opted for an open source version of Android without the main services installed. In China, American social networks and other Western software are banned by default and replaced by regional alternatives, but changing the thinking of other markets that Google Maps or Gmail is expendable is no easy task. According to The Information, Huawei predicts a drop of at least 20% in cell phone sales in 2020 if the ban is maintained.
Outside Asia and Europe, the company’s activities in electronics have been reduced: fewer and fewer new phones are being introduced in the region, with the preference for launches being for other electronics, such as smartwatches and headsets.
The chessboard in Latin America
Returning to the case of 5G and the infrastructure sector, Huawei’s major competitors in the sector are not even Americans: Swedish Ericsson and Finnish Nokia complete the top companies of this market. That is, while the ban on the use of parts and services for electronics is a protectionist measure that favors national suppliers, the issue of 5G is much more political than commercial.
So far, Colombia has already warned that it will proceed normally with the original planning, which includes the Chinese company and the Mexicans from América Móvil as interested. In addition, Brazil is preparing the “largest 5G auction in the world”, a process that is already long overdue and that will involve Huawei at least as one of the competitors. The decision to let the company compete as one of those interested in taking care of the infrastructure was recently confirmed and does not restrict the participation of potential stakeholders.
The Chinese company is not only already conducting tests with telecommunication carriers, but has also been dedicated in recent years to finding solutions for rural locations and small carriers – an experience that can be valuable in regions with less infrastructure.
And the discussion in Brazil was, in fact, complicated, involving more than one sector of the government. On the one hand, the US “council” stating that it is better to keep the company out of 5G plans, including threats of non-compliance with future agreements in other sectors, as President Donald Trump‘s representatives have already suggested regarding the Defense sector cooperation with Brazil. On the other, the possibility of a good deal with a company capable of delivering what is necessary, but with the weight of suspicion. The interest behind both sides must be assessed with equal suspicion.
Latin American countries with close relations to the U.S. need to make a difficult choice, especially without having access to all the necessary information to do so. Without evidence on espionage, etc., Huawei should at least be considered in frequency auctions. In the chess match between the country and the Chinese manufacturer, there is, at least for now, no indication that either side will apply a checkmate. But preventing one side from making the next move does not seem to be the best choice to accelerate the end of this game.
Translated by Fabiane Ziolla Menezes