Google will not be missed in China because it simply does not exist.
For more than one billion people glued to their smartphones in the world’s second-largest economy, Baidu is the search engine of choice. WeChat outranks Gmail and Youku, not YouTube, is the leading video streaming app.
Quite frankly, Huawei will continue to dominate in the land that blocked Google.
But overseas, it will be a different story. A ban on using Google’s enhanced Android OS system would curb the high-tech group’s global ambitions after being dragged on to the frontline of the US-Sino trade war.
“The worst case would eventually see a total cut-off of access to US technology … [Huawei] would almost certainly not survive this outcome in its current form,” the influential Eurasia Group consultancy stated in a report last week.
If that scenario came to pass, the family-run business which became a telecom juggernaut could see its overseas sales shredded.
More than 49% of Huawei’s smartphone shipments in the first quarter of this year were to international markets. Sales in the Asia-Pacific region, Europe, the Middle East and Africa were crucial to the firm’s bottom line in 2018.
With stylish designs, affordable prices and the Android OS brand name, the company Ren Zhengfei built is now the second-largest smartphone maker on the planet.
Losing future Google platforms would wreck Huawei’s game plan and force it to work on its own operating system.
“Just look to players like Nokia, Blackberry and Microsoft that have all failed recently in similar endeavors,” Ryan Whalen, a professor with the Law and Technology Centre at the University of Hong Kong, said, adding that Google’s stranglehold on the sector had sucked the life out of rival competitors.
More importantly, how that would play out in a highly competitive marketplace is open to debate. A state-of-the-art design needs a state-of-the-art operating system that consumers can trust.
“We have already been preparing for this,” founder Ren, a former People’s Liberation Army officer, told the official state-run Xinhua news agency after President Donald Trump blacklisted the group. “US politicians underestimate our strength.”
Yet an even greater challenge is the decision by the US Commerce Department to squeeze Huawei’s supply chain of crucial components such as semiconductors.
“Focusing on the actual chips may be a mere sideshow,” Douglas Fuller, an associate professor at the City University of Hong Kong, and Paul Triolo at Eurasia Group, wrote in a commentary for SupChina. “The tools needed to design chips, called electronic design automation (EDA) tools, are dominated by a small oligopoly of three firms: Cadence, Synopsys and Siemens’ Mentor Graphics.
“Without these tools, it is basically impossible to design chips. Cutting off Huawei, its affiliates, and, potentially, others that attempt to supply Huawei with chips from access to these EDA tools would sound a death knell for the company,” they added.
Recognized as the poster child of the “Made in China 2025” program, Huawei is at the cutting edge of 5G, which will be rolled out across the globe in the next few years.
So far, the group has signed 40 commercial contracts and announced plans to ship more than 100,000 base stations to run the super-fast networks, despite pressure from Washington.
At the same time, critics of Huawei have pointed out that its technology will act as a backdoor for cyber-snooping by Beijing, an allegation which has been vehemently denied.
“In today’s world, all manner of once garden-variety government and commercial decisions, like Huawei, are taking place in a kind of clash-of-civilizations cauldron, pitting China against the West,” Richard McGregor, a senior fellow at the Lowy Institute, an independent think tank based in Sydney, said.
“Huawei, for example, is perhaps China’s most successful private multinational, nurtured initially with state support and protection but which over time [has] developed into an advanced company with [a] global reach.”
Major European countries, such as Germany, France and the United Kingdom, are likely to include the Chinese juggernaut in their 5G infrastructure plans.
Still, the rumors persist. Last month, The Times newspaper in the UK reported that the Central Intelligence Agency, or CIA, had told spy chiefs that Huawei had “received funding from branches of Beijing’s state security apparatus.”
“American intelligence shown to Britain says that Huawei has taken money from the People’s Liberation Army, China’s National Security Commission and a third branch of the Chinese state intelligence network, according to a UK source,” The Times added.
Again, the company has denied these claims, so has Beijing.
Yet to illustrate how relations between China and the US have descended into verbal hysteria, one should look no further than the bellicose Global Times.
In a pugnacious editorial, the English-language tabloid run by the official newspaper of the Communist Party, the People’s Daily, said this week:
“Huawei may undergo a period of difficulties and its American suppliers will also suffer losses. The difference is that as long as Huawei makes efforts and Chinese society offers the company strong support, Huawei will have a new start to become stronger, while those American suppliers will likely see continuous business contraction.
“Stopping the supply to Huawei means they are irreversibly losing the China market. The China-US trade war has caused losses on both sides. The pain inflicted on China is temporary. But what the US has to face is growing long-term pain. The so-called decoupling with China is very likely the real beginning of US decline.”
Oh, and you can find that rant on Google, unlike the one billion Chinese people glued to their smartphones.