Huawei and Tech Competition
1688澳洲新闻网
11 December 2019

The following is a translation of an opinion piece by Huang Ruo (黄若) and published on 1688.com.au (1688澳洲新闻网).

Huang Ruo: China should learn to connect with the world

The case of the Huawei Princess (arrest in Canada of Sabrina Meng Wanzhou) is a knot that cannot be undone. It’s like a chain, with one ring connected to another. No one can escape the curse. On the one hand, Huawei is afraid of US sanctions because if the US stops supplying parts, then Huawei will be stuck like ZTE. But from another perspective, American suppliers are also afraid that Huawei will not buy their goods and their business will be affected. Some manufacturers have even been forced to close. After all, Huawei is the second largest mobile phone manufacturer in the world today. Who wants to give up such big business? When Huawei stops production, it means that all subsidiary manufacturers will also stop working and the global economy will be affected, too. This is also why equity capital in the global mobile phone parts sector fell when something happened to the princess.

The market is no longer one of life or death in today’s high-tech era; rather it is one of a mutual division of labour. No one can make everything by themselves without relying on others. The Chinese say you cannot rely on other people for core technologies. This is basically a non-issue because a mobile phone or a computer involves thousands of parts and each is indispensable, such that every part is a core technology. For example, there is a company in the UK called ARM. Its chip is called “systems and platforms” or “system-on-a-chip (SoC)” infrastructure. It’s a very inconspicuous part, but every IC factory needs it. Is that a core technology?

There is a kind of thinking by modern Chinese officialdom which says that “other people can be controlled by me, but I must not be controlled by others.” This is the hegemonic view of the big powers. It’s basically a world in which I am within you, and you are within me, in this era of globally distributed spare parts production, of course. The kind of thinking that doesn’t rely on other people is really absurd. We see that although the factory labels are different, many parts are interchangeable in the European automotive industry. Recently, Takata Corp., a Japanese airbag manufacturer, started a global airbag recall because of quality flaws. Under extreme pressure, it filed for bankruptcy protection in Japan and the US last month. Now we know that it holds an 80% share of the world’s airbag market. Most of our cars use its airbags. Is that a core technology or not?

Also, now, everyone in China will say: Huawei wants to compete for the right to speak on 5G and become a 5G standards setter. However, I don’t know if the Chinese have thought it through. They are not the inventors of wireless communications, nor the creators of the network architecture.  These are the result of the long-term accumulation of work by many scientists in the West. Now China comes along and says: I want to have the right to set network standards. What do those Western countries which discovered radio waves and developed wireless networks think about this? It’s as if a highway opens and although you did not make any contribution, you come along and say: I will have the final say as to how cars are to be driven on this highway. Is that reasonable? That is why Western countries are all uniting against China. On the contrary, I think there is no harm in China studying when Japan’s automobile and electronics industry were just emerging. People came in without complaining, bought patents, observed, learned, and then found an opportunity to create, invent and sell to others. In the end, Japan became one of the world’s leaders in automobiles and electrical appliances.

I think that Huawei is taking the correct road in some respects, investing large sums of money in research and development and applying for patents. Everyone who wants to use my patents has to pay for them. Others who can go around you are disrespectful. They will only pay the toll if they can’t get around you. So everyone follows the rules and says nothing. This is the rule by which Westerners do business, but Chinese people don’t have this custom. If they can get around it, they will. If they can’t, they will steal it. If they can’t steal it, they will get you to invest, trading shares for your technology. Once they have the technology in hand, they will find a way to get rid of you. Don’t keep playing that clever game. People will figure it out in the end no matter how stupid they are. You can see that parts used in Chinese and foreign auto joint ventures are outdated goods from the previous generation. Why? Chinese people will probably understand when they think it over carefully.

In fact, the biggest advantage of doing business in China is that the market is big. Of course standards are not compulsory. China has enough of a market to make its own standards and then close the door to play by itself. Isn’t that how Baidu, Tencent, and Alibaba all developed? But if you want to go out in the world and engage with others, I am afraid you will have to play according to their rules. After all, this is the way it’s been done for hundreds of years! Don’t take command as soon as you come on board. And don’t engage in trickery, then shout how great your country is. Be low-key. Don’t shout until you get strong!

 

Translation by: Chris Lanzit, NAATI Certified Professional Translator (Chinese-English), NAATI Practitioner ID: CPN0BC84W

Date of Translation: 18 January 2019

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