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Home » Daily Briefing » Daily briefing - 25 January 2019

Daily briefing - 25 January 2019

Huawei's Ken Hu

Is Huawei the symbol of China's new role in the world? This year, or next, the company expects to become the leading manufacturer of smartphones. "Even without the US market we will be number one smartphone maker in the world," Huawei Consumer CEO Richard Yu told Reuters. "I believe at the earliest this year, and next year at the latest." And while Apple chief executive Tim Cook has blamed an economic slowdown in China for Apple's flagging valuation, the iPhone hasn't really evolved much in recent years despite its increasing price premiums. Huawei is about to leapfrog past Apple, with its QR-code, Alipay and WeChat Pay networks all working together to offer an alternative to the Western payments standards.

And it's not just other smartphone manufacturers who are in a sweat. The anglophone 'Five Eyes' security alliance between the US, UK, Australia, New Zealand and Canada has been in a twist over Huawei for several years, with the US effectively banning the company from installing infrastructure since 2012. (The Five Eyes have lately been looping in Japan and Germany, following the decision last year to heave together against the Chinese.) Under pressure from the US, Poland was the latest to get cold feet, announcing yesterday a move to ban Huawei. Germany Is humming and hawing about the right decision.

Commercial bosses are non-too-thrilled about being banned from using Huawei. Vodafone's chief executive will pause acquisition of Huawei gear, although he warned that Huawei was one of only three global suppliers, while BT's chief architect grumbled in Huawei's defence that it was the only true 5G supplier. In fact, the opposition of Anglophone countries has meant more investment in other partners. The beneficiaries of this have included Africa, which Huawei and ZTE are blanketing with new infrastructure. Other Chinese companies such as Transsion are riding these rails to huge profits.

Eric Xu, one of Huawei's rotating chairman, hinted that there are non-technical reasons for the US fear of Huawei. "For Huawei, as leader in 5G technology, we don't have the opportunity to serve the U.S. consumer with 5G solutions and services, then the U.S. market is a market without full competition while still blocking leading players from participation. Now, I'm not sure whether they can really deliver their objective of becoming the world's No. 1 in 5G," he said, according to a translation that was verified by CNBC." It's worth noting too that Huawei has plenty of eager partners in Europe, and Mr Xu said that he "highly appreciates" GDPR, which must be interpreted in part as a dig at the US. "It should be a template for other countries as it would create standards and guidelines," he told CNBC. "And as long as we comply with those we can do business."

Meanwhile, Mastercard affirmed its commitment to China despite holdups in entering the domestic market. The company said it hopes to present another application for a bankcard clearing licence in the "very near future," after reports earlier this month suggested that the Chinese authorities were holding up the application. "Forming trusted partnerships remains a cornerstone of our operating philosophy around the world, and our approach in China is no different," said Ling Hai, co-president, Asia Pacific at Mastercard. "China remains a vital market for us and we look forward to working with the Chinese government and local partners in growing and developing the overall payments ecosystem in the long-term."

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