Is Huawei ban, a blessing in disguise for China?

Sun Tzu said: “just as water retains no constant shape, so in warfare, there are no constant conditions”. Applying this to the trade war between America and China that culminated in the banning of Huawei, Flagship Company of China, America has indeed changed the ground conditions, but in doing so it has given blessing in disguise to her competitor. Here are the facts:

Since May 2019, curtailing Huawei as a business strategy was on the air in US. Huawei was anticipating some form of crippling action is on the way. Finally, US banned Huawei from selling her products in America and elsewhere with allies. The ban cannot be generally implemented due to plethora of companies that have buyer/supplier relations with Huawei. Therefore US made a selective move.

This move had two limbs: one targeting the mobile market where Huawei phones are sold cheaper than her competitors. In mobile market US prevailed upon Google to make its app unavailable for mobile users who have Huawei phones. In addition Google also stopped YouTube, Gmail and Play Store for Huawei phones. 

Second one is much more potent, that is, shutting out Huawei from the networking segment where American companies that use components such as HI Silicon are required to phase out the purchases from Huawei. Most noted amongst these companies are Verizon and AT&T.

Going a step above America pressured Taiwan Semiconductor Manufacturing Company (TSMC) not to process new orders for the supply of chips from Huawei. TSMC founded in 1987 by Morris Chang has developed the entire ecosystem in the semiconductor line and has been a major supplier to international techy companies including those in China. Even chip designer Arm Holdings was not spared by US. Wholly owned by Japan’s Softbank group, Arms which designs multiple uses of chip in electronics is under great pressure to cut ties with Huawei.

Considering the circumstances would change in the future and expecting US to leverage on her techy strength, Huawei put into operations few precautionary business tactics. 

1. Diversify purchases of semiconductors from willing suppliers who are outside the US pressure circle such as Samsung.

2. Strengthen its chip subsidiary HI Silicon to meet up with new challenges.

3. Huawei Mobile System (HMS) is being developed as an effective alternative to Google Mobile system (GMS).

4. Insource purchase of semiconductors from Semiconductor Manufacturing Industrial Corporation (SMIC) is accelerated. Incidentally SMIC received a research grant of more than two billion US$ from the Chinese government

5.  Baidu, Chinese equivalent of Google that handles 75% of domestic search queries is being developed with multi lingual multi-dimensional search engine platform to be made available for both Huawei and non-Huawei users.

Cheers!

Muthu Ashraff 

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

America is not fighting Huawei, she is fighting Sun Tzu

Block Huawei, arm twist allies to do so, harass Huawei officials, embark on info war to stigmatize Huawei, make Huawei a punching bag for Americans and so on are tactics US is piling up to make Huawei feel the pain and lose the revenue. Huawei is not perturbed at all. It goes on with business as usual. Why because fighting Huawei indirectly means that US is indeed fighting grand master Sun Tzu.

Does US have a strategy that can quicken the fall of Huawei? None so far. Says Sun Tzu: “Strategy without tactics is the slowest road to victory. Tactics without strategy is the noise before the defeat”. My take is, US is going to be defeated and very badly defeated as more than half of the world has entrusted  Telco infrastructure upon Huawei. Ostensibly, US has no viable strategy and all these tactics are too haphazard and not connected to any strategy, if at all one is up there.

Sun Tzu mandates: “Rouse him (the opponent) and learn the principle of his activity or inactivity. Force him to reveal himself, so as to find out his vulnerable spots”. Huawei did that marvellously well. By selecting Cambridge in UK as their centre for research facility and getting the approval too, Huawei provoked US to take risky steps. One, US revealed her inability to fight Huawei in techno competition. Two, she is losing tremendous amount of revenue from own 5G if that is much ahead in terms of operational excellence. Three, US vulnerability is clear as blue sky where it cannot bring the entire EU on board.

Sun Tzu commands:  “Move not unless you see an advantage; use not your troops unless there is something to be gained; fight mot unless the position is critical”. The spat between Huawei and US spotlighted the following:

1. The move by US has been widely condemned by industry enthusiasts as 5G roll out in US and allied countries would be delayed for years as there is no worthy competitor found yet. Samsung, Nokia Ericsson consortium and few others are far behind as Huawei has majority of 5G patents registered and using any of these could lead to serious consequences.

2. US spent considerable amount of political capital in canvassing for the blocking of Huawei. Beyond her captive allies only India has jumped into the fray mainly due to historical hostility towards China

3. Situation in terms of Telco and mobile technology in US is not so critical in America to take on Huawei for a fight within US or elsewhere. Definitely it  is not going to “Make America Great Again’. Instead it has overnight transformed US as an Economic Bully!

Cheers!

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

For China supporting Huawei is brilliant business strategy

It is not secret at all; China supports Huawei to the hilt: money, political clout and diplomatic push are all offered over the plate. “Go for the jugular vein” was the commandment given to tech giants Huawei and ZTE. What this brilliant strategy brought out? Read more for the answer:

Huawei fiasco brought out an evident fact: US is dethroned in the Techno Empire. When 4G race was won by America few years ago it brought millions of new jobs and a huge bag of money to the Gross Domestic Product, estimated to be around US$ 100 Billion. More than that, 4G technology enabled US to carry out effective surveillance over the people both in US and elsewhere, not to mention industrial espionage.

Huawei went much further and unveiled 5G along with excellent technology infrastructure that enables and enhances inter-connectivity & inter-communicability at the highest order. The game changer 5G technology has both civil and military applications. As 5G gets rolled out connectivity apart it can bring speed and accuracy to the maximum level. The revenue stream in selling 5G telecom and other equipment is colossal:

America gets bowled out on three aspects that are so vital for her to survive as number one in today’s competitive and somewhat threatening environment:

1. If US cannot come out with a competing product it won’t be able to provide new jobs estimated to be 2 Million

2. The revenue stream loss would be in the region of US$ 450 Billion

3. American capability in information gathering, access to data regarding movement, habits, lifestyle, conviction and buying patterns are affected along with high level of mounting surveillance and info-warfare.

Now the question is whether US can out-beat Huawei. Lot of efforts are being made by corralling Microsoft and Dell to bring forth a viable competitive product for domestic market and abroad. America is also urging Nokia and Ericsson to join hands in developing mobile technology that can beat Huawei at best or be on par at the worst.

For the interregnum America resorts to blocking the sale and use of Huawei products and urging her allies to come on board. Will this Business strategy succeed?

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

The real reason why America blocks Huawei?

Business is the real reason behind blocking of Huawei by America. For the last couple of years two things are happening in between China and USA. One is that US trade deficit is narrowing but still substantial at US$ 350 Billion while the second one is US techno edge over China is shrinking at an alarming pace.

Huawei is the real reason for both of these happenings. America relies on hardware and software sales in various fields including telecommunication, information technology and robotics that have dual use both in civil and military applications. This morphs into security and surveillance issue on one side and cyberspace issue on the other. US dominance is now being challenged by Huawei in this field. Its Fifth generation techno revolutionizes not only the speed but pinpoint accuracy too.

America needs captive markets to survive only if she can keep supremacy in science & technology. To do that Five Eyes Alliance was formed.  

Five Eyes: Original partners are USA together with Australia, Canada, New Zealand and UK

Five Eyes Plus: The existing alliance was extended to include Denmark, France, Holland and Norway to form Nine Eye alliance

Nine Eyes Plus: Further extension was made after roping in Belgium, Germany, Italy, Spain and Sweden to make it Nine Eyes Plus

Associates: Nine Eyes Plus allowed the following countries to function as Associates: Japan, Israel, Singapore and South Korea.

America wants to block Huawei by every member countries in Nine Eyes Plus as well as by the Associates. After announcing the blocking of Huawei America sounded that all Alliance partners must act like a herd in blocking Huawei totally. But the question is whether US can beat Huawei? It is clear that Huawei has sped fast America in 5G and is already investing on the Sixth Generation. Despite arm twisting the result so far is not convincing that US can secure her dominance.

For example out of the Five Eyes only Australia and New Zealand blocked Huawei fully. UK opted for partial blocking along with Holland the latter in Five Eyes Plus. In the Nine Eye Plus grouping only Germany expressed concern without any concrete actions. Surprisingly, the most enthusiastic supporters were found amongst the Associates. Japan joined South Korea to block Huawei. Singapore played it with deft diplomacy by calling for tenders and thereafter persuading SingTel to opt for the package given by Nokia & Ericsson.

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist