Editor’s note: This commentary is by Narain D. Batra, a professor of communications at Norwich University. He’s the author of the forthcoming book, “India In A New Key: Jawaharlal Nehru To Narendra Modi.”
Let’s put aside for a moment the dark side of Huawei, China’s technology giant, that landed its chief financial officer, Meng Wanzhou, the daughter of the founder Ren Zhengfei, on parole from jail in Canada for wire and bank fraud allegations. There were charges against Bo Mao, a Chinese visiting research scholar at the University of Texas-Arlington for stealing technology for Huawei, certainly not the first Chinese industrial espionage case. And then there’s a widespread belief in the United States as a former intelligence director John Ratcliff wrote in the Wall Street Journal, “China robs U.S companies of their intellectual property, replicates the technology, and replaces the U.S. firms in the global marketplace.”
China has always done so, and gotten away with it; and no one could do anything about it as Cisco and Motorola discovered and sued Huawei over the theft of intellectual property. With annual revenue (2019) of more than $120 billion, 194,000 employees with offices in 170 countries including one in Bangalore for software and R&D — and the backing of China — you can heap opprobrium on Huawei; or if you dare, compete with it.
Regardless of its state-supported predatory behavior, Huawei’s stupendous growth as a global technology giant has to be more than “rob, replicate, and replace.” The largest supplier of telecommunications hardware including 5G equipment, in 2020 Huawei surpassed Samsung in smartphone sales though in brand reputation it pales before Apple.
Huawei is a model of a new form of global corporation: a private company with the full backing of the economic, financial, and diplomatic might of China. The other model is ZTE, a Chinese government owned telecommunications company that is managed privately. Both ZTE and Huawei are a technological version of the Belt and Road Initiative (BRI), a master plan to connect, trade and control.
Huawei had a humble beginning in 1987. A former officer of the People Liberation Army engineering corps, Ren Zhengfei, established the company to manufacture telephone exchange switches, a seemingly simple but complicated technology that along with gateways, routers, and bridges is at the core of internet infrastructure and communications revolution. And the legend has it, Ren reverse-engineered foreign technologies to build up a national company to compete and replace the foreign competitors in China. And in fact he did more than that. He surpassed them and chased them out to their homesteads.
Foreign collaboration through the lure of the huge Chinese market, reverse engineering, and replacement of foreign technology under the government protection has been the path that China manufacturing juggernaut has taken to dominate the global marketplace. In a case study on Huawei for the Center for Strategic & International Studies, Chinese scholar Nathaniel Ahrens wrote that when Ren Zhengfei told former President Jiang Zemin that “switching equipment technology was related to national security, and that a nation that did not have its own switching equipment was like one that lacked its own military,” the relationship between China and Huawei was sealed. The company landed a contract as a switching equipment supplier for the PLA telecommunications network. Huawei became a national champion and a corporate front for China’s technological dominance so much so that Ren Zhengfei, according to Dr. Ahrens, could say boldly, “Our government has a successful diplomatic policy which mandates winning a lot of international friends. Huawei’s international marketing strategy is to follow China’s diplomatic route, and I believe this strategy will be successful as well.” This is how the Huawei’s global presence syncs with China’s foreign policy objectives.
But this is not the only source of its competitive advantage. Despite the allegations of intellectual property shoplifting, Huawei is an innovative company — an intelligence and information sucking giant — with more than 50,000 researchers employed in research centers in the United States, Canada, Europe, Russia, United Kingdom, Israel, India and others. In 2020 Huawei was estimated to spend $20 billon on R&D. India’s conglomerate Reliance spent only about $340 million (Rs 25 billion) on R&D, according to Statista. Reliance wants to dominate India. Huawei wants to take over global markets.
Huawei’s innovation is not limited to product design and manufacturing of devices from phones, laptops, tablets and wearables to 5-G infrastructure; it extends to its customer-centric management practices. At the point of sale, for example in a developing African country such as Nigeria or Ethiopia, it might not only undersell its competitor with deep discounts and technology upgrades but also make vendor credit promptly available through a state bank such as China Development Bank. A Huawei cutting-edge technology such as 5-G with the full backing of China and the prospects of investment via Belt & Road Initiative is irresistible for some poor developing countries leading to debt traps. Many industrially advanced countries are alarmed at China’s behavior.
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This has led to international backlash against Huawei leading to bans and sanctions not only in the United States but also in other countries, for example, UK, France, and Australia. The challenge for India is not only “to safeguard its 5G plans and maintain the integrity of supply chain security and discourage insecure equipment,” according to the government directive, but to find a path to achieve supremacy in telecommunications infrastructure and other strategic industries. India should cherry-pick and support financially and politically some key strategic industries, such as defense, telecommunications, AI, 5G, space, transportation, biotechnology and renewable energy, that serve not only the huge domestic market but also open doors for India to compete for its share in international markets.
India’s self-reliant policy needs to be based on the pursuit of superiority and supremacy; so that whatever is manufactured in India is competitive in the global marketplace. Pharmaceuticals and software, for example, are industries that have made India not only self-reliant but also competitive worldwide. It’s important to keep in mind that it’s only through international trade — manufacturing, services, hardware and software — that India can spread its culture and influence. Moreover, international trade and national security go together.
The Link Lonk
January 25, 2021 at 12:00AM
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Narain Batra: How China’s Huawei dominates vital technology - vtdigger.org
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