US indictments against Huawei a step towards splitting the world’s telecoms industry in two
- The Shenzhen-based firm finds itself caught in the middle of a hi-tech arms race between the US and China
The US indictments against Huawei Technologies for violating US sanctions against Iran and stealing trade secrets are seen as the latest steps that could potentially push the world into two distinct camps when it comes to the telecommunications industry.
If Huawei is blocked from providing network equipment to the US and its allies, there is a danger of a split in the industry – where Western companies and Asian firms are only allowed to serve their own markets.
Countries such as Britain, Germany, Australia, New Zealand and Canada have either banned or are reviewing whether to allow Huawei equipment to be installed in their telecoms networks on the basis of security concerns over the firm’s relationship with the Chinese government.
“[In the market,] customers will always be influenced by quality and price,” said David De Cremer, a professor of management and organisation at the National University of Singapore (NUS) and author of the book Huawei: Leadership, Culture and Connectivity. “But if markets do not stay open, and if they have no choice to buy products [whether] from Huawei or Cisco then economic principles will no longer play a role.”
But what may be holding back these countries is the impact of that move on the cost and quality of their telecommunications infrastructure.
The concerns underscore the market lead that Huawei, which founder Ren Zhengfei started in 1987 as a company selling telephone switches, has built for itself as the world’s largest telecoms equipment supplier.