Bottom line: Huawei’s latest big financial commitment to the UK is mostly for show, but Britain could still emerge as a winner over the longer term if Huawei conducts more R&D work in its British labs.
After getting the cold shoulder from the US for its smartphones, telecoms superstar Huawei is turning increasingly to Europe, and specifically to Britain, for consolation. That’s the key takeaway from the latest reports that say Huawei has told British Prime Minister Theresa May that it will spend a further 3 billion pounds ($4.2 billion) on procurement from the UK on top of its other commitments to the country. (English article)
This particular move seems mostly political, and also it’s questionable how significant it is. Huawei made its commitment last week during a trip by Theresa May to China, and this kind of mega-commitment is quite common during these meetings between Chinese and global leaders. The fact of the matter is that Huawei posted 600 billion yuan ($97 billion) in sales last year, meaning it had to spend perhaps half of that amount, or around $50 billion, on procurement of various components for its core networking equipment and smartphones. Read Full Post…
I don’t usually like to write about the same company or issue twice in the same week, but it’s hard to ignore a new report that has just come out of Washington saying US telcos shouldn’t do business with China’s top 2 telecoms equipment makers due to security concerns. Of course people who follow the industry will know that I’m referring to a new Congressional report taking aim at Huawei and ZTE (HKEx: 763; Shenzhen: 000063), 2 of the world’s leading telecoms equipment makers and also 2 of China’s high-tech exporting superstars. The report comes just a day after reports emerged that Huawei was considering an offshore IPO in an attempt to diffuse concerns that its equipment can be used for spying by Beijing (
After years of protectionism that effectively locked out private investment from the sensitive telecoms sector, Beijing finally looks ready to open up the space with its release of a draft plan detailing new areas for private investors. This latest development follows signs earlier this year that the telecoms regulator was preparing to open up the sector, which many greeted with skepticism due to Beijing’s previous empty pledges to open the industry when it entered the World Trade Organization back in 2001.
