What We’ve Learned fromthe Blockage on Huawei

Recently, Huawei offered to spend £50 million to equip London’s subway system with mobile phone reception, as a congratulatory gift for the Olympics; however, the British government has rejected this large gift over national security reasons. Previously, Huawei was interested in purchasing the American company, 3Leaf, but the Americans rejected the offer, using the same reason.

As a leading Chinese manufacturer in developing and inventing new telecommunication equipment, in recent years, Huawei has sought to expand its European and American markets, but it frequently has been blocked. Since Huawei’s attempt to purchase 3Com with its American partner, Bain Capital, a few years back, its bid for providing telecommunication equipment to Sprint Nextel, and now the congratulatory gift to London, Europeans and Americans have used the same reason to block them all: national security.

National security and the protection of the nation’s interests must be every country’s top priorities and be dealt with seriously. However, looking at all the challenges Huawei has faced in the quest to expand its European and American markets, no matter if it was 3Leaf, 3Com, Nextel, or the mobile reception in London’s subway, it is hard to relate any of these incidents to national security. The only way to explain it would be the fact that Huawei’s entry would be big competition for existing companies in those countries and would affect the profits of those companies. Hence, “national security” is used as a “shield” to block Huawei from entering the market.

In recent years, Europe and America have tightened trading policies on Chinese corporations; these types of activities have become especially common after the financial crisis. However, the parties involved must notice that in recent years, the actions taken against Huawei in countries such as America and Britain have gone beyond the acts of just simple protectionism. Traditionally, protectionism is carried out by adding anti-dumping duties, countervailing duties, carrying out special safeguard measures, investigations, and the like; Huawei, on the other hand, was accused with an unwarranted charge of threatening “national security”.

This is due to the fact that most Chinese corporations are subcontractors and manufacturers that produce common processed products and general products; these represent low-end manufacturing, with no core technology, no core competencies, and can be restricted and restrained by using regular means of protectionism. However, Huawei is a high-end manufacturer that has mastered quite a few core technologies and whose products are quite competitive. Europe and America could use only vain excuses such as “national security” in order to block Huawei from entering their markets.

This has given China new enlightenment: Chinese corporations need to strengthen core competencies and strengthen competitiveness in foreign markets. They will face, not only their own challenges, but also external pressure; they will need not only to overcome the bonds of tradition, but will also need to change the way other countries perceive them.

So, how do we get those Chinese corporations that already have core technologies and core competencies to enter European and American markets quickly? Apparently, the effort of one corporation is not enough. On one hand, Chinese corporations need to work as a group by using international rules together to move forward into the international market, especially European and American markets; meanwhile, the departments involved need to tighten their coordination with international organizations and help ease the difficulties, conflicts, and resistance facing Chinese corporations. Also, when a corporation is purposely blocked, like Huawei was, it should join forces with the government, and the interest of Chinese corporations should be protected though negotiations between governments.

The Chinese government should also apply the same principles to foreign corporations. When a country uses an unreasonable excuse to block Chinese corporations from entering its market, China should forbid the same type of corporations from that country from entering the Chinese market.