Hello again Global Impact readers,
This week, John Artman, the SCMP’s technology editor, is in charge of the newsletter. He looks at how Huawei has fared in the two years since their CFO was arrested in Canada.
As Meng case continues, Huawei’s future still uncertain
When Meng Wanzhou, CFO of Huawei Technologies Co. and daughter to founder Ren Zhengfei, stepped off her plane in Vancouver on December 1, 2018 for a regular stopover, little did she know that she would quickly become a piece in a much larger chess game between the Trump administration and China.
Two years and a new incoming president later, things could be looking up for Meng. Last week, the US Justice Department began negotiations that could see her freed. To do so, she would need to admit to some of the bank and wire fraud charges she faces in the US in connection to alleged violations of US sanctions on Iran. Both Meng and Huawei deny any wrongdoing.
Justin Trudeau, prime minister of Canada, has not commented on the negotiations, opting instead to emphasise that the release of two Canadian citizens held in China for more than two years is his "top priority”.
Meng's story, however, is just one part of a much larger one.
In May 2019, US President Donald Trump signed an executive order that, while not naming Huawei directly, effectively cut them off from doing business with American companies. Days later, Google announced that Huawei could no longer carry Android on its new devices. Huawei, however, was prepared, saying “All companies have business continuity plans … [it is the] only responsible way to do business”.
Even though the Shenzhen-based company has been forced to make constant changes to its products and borrow money from its employees, they claim to have enough chips for all their businesses... except smartphones.
In order to cope, the company in November sold its budget smartphone brand, Honor, to a consortium of over 30 agents and dealers. Huawei said the sale will help Honor’s channel sellers and suppliers “make it through this difficult time” and the move was made by Honor’s industry chain to “ensure its own survival”.
Less than 10 days later, Ren, at a farewell party for Honor, told his company that he hopes Honor will be ". . .the strongest competitor of Huawei in the world, surpass Huawei, and even use defeating Huawei as your motivation”.
On top of that, Huawei has repurposed its internet of things operating system (OS), Harmony OS, for smartphones, saying it will be on its latest phones in 2021.
While any short-term relief for the company doesn't seem likely, many are optimistic that if not softer, the incoming Joe Biden presidency will at least have a more coherent strategy.