Huawei Goes on the Offensive 华为发起攻势

Maybe I’ve become a bit jaded after writing about Chinese companies for so long, but I’ll openly admit that I was quite encouraged by the latest reports that telecoms equipment giant Huawei has lodged a complaint in Europe accusing a company of monopolistic practices. The reason for my excitement is that after years of watching Chinese companies constantly assume a defensive posture on the global stage, it’s refreshing to finally see one go on the offensive to fight what it believes is unfair treatment. Whenever Chinese companies appear in the headlines due to conflicts overseas, the chances are nearly 100 percent that those companies are coming under attack by local interests, sometimes over allegations of unfair subsidies, and other times due to nationalistic concerns. In nearly every case, the accused Chinese company is likely to quickly assume a defensive posture, complaining that it’s being treated unfairly and arguing why the allegations are untrue. So it’s nice for once to finally see a Chinese company take the offensive and fight for its right when it believes it is receiving unfair treatment in the market. In this case Huawei lodging its anti-monopoly complaint after failing to license key 3G technology patents from a company called InterDigital (Nasdaq: IDCC). (English article) Huawei is  accusing InterDigital of extortion, saying the company made “unreasonable and discriminatory demands” for rights to the patents for its 3G wireless technology. Huawei filed its complaint after it was sued in the US last year for patent infringement by InterDigital, which also sued Nokia (Helsinki: NOK1V) and LG Electronics (Seoul: 066570). So from that perspective, Huawei’s latest action is a bit reactionary to InterDigital’s lawsuit, and in fact this kind of suit and countersuit has unfortunately become quite common in the technology industry. But from my perspective, this kind of action by Huawei at least shows it finally realizes the global market is a tough and competitive place, and the only way it will be able to survive and succeed there is to play by the same rules as other major global companies. That means that it, as well as other Chinese companies, will need to use more aggressive tactics, not only when they come under direct attack but also when they are entering markets where local interests might want to use excuses like national security, unfair subsidies and broader xenophobic fears to keep them out of the market. Huawei tried out its legal attack skills at home last year, when it sued crosstown rival ZTE (HKEx: 763; Shenzhen: 000063) for patent infringement. (previous post) Now it appears to be taking its more aggressive strategy to the global stage, which, combined with a well-funded public relations campaign, could finally help it win better access to Western markets in the next couple of years.

Bottom line: Huawei’s new anti-monopoly complaint in Europe reflects a new more offensive posture that more Chinese companies need to take to succeed on the world stage.

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