Wednesday , June 16 2021

More than a company, symbol of the Chinese political-economic model




Any executive who has to deal with Chinese analogues knows that the family factor is key to building trust. It's part of their culture. That is why the arrest of Huawei's chief financial officer, Meng Wanzhou, not only angered his father, founder of the company, but also the Chinese government, which, following the same cultural logic, regards this company as almost part of the process. family clan of the country's technological and economic success comparable to others such as Lenovo, ZTE, Alibaba Group, Tencent and even Baidu.

It is essential to understand this relationship between a communist political system and a commercial expansion of capitalism, an experiment that has been economically successful, which generates a series of relations of trust between the public and business sectors.

Thus, for the Chinese government, the prison is stabbed in the back, days of having achieved a trade truce with the United States. In fact, this is the reason for the nervousness of all the markets in the world, including the Chilean (see related note): the uncertainty about this incision of trust between the two countries, just when relative peace was achieved during the commercial war. .

And to make matters worse, the arrest warrant was made by the US administration.

From connectivity to Top 2 for smartphone sales

The Chinese government's support for Huawei is explained by its history. He was born in the late 1980s with an initial capital of $ 3,500 (thereafter), just before the dot-com era of North America. But it did not come about as a content company or services on the internet.

The opposite. Your core was to provide the necessary connectivity for telecommunications to work. That is, the manufacture of PBXs to connect different points. Its main clients were telecommunications companies.

Already in the 90s, it followed the same path, technologically supporting the promising "network of networks" (internet), which took its first steps in kindergarten on a massive level. Huawei had the equipment and the back to do this, so in 1996 he decided to leave the borders and in 1997 launched products to connect GSM, CDMA and UMTS wireless networks.

In 2000, when the world was shaking by the false hangover of the "millennium bug" (Y2K), problems with the United States began. It has alleged that Huawei has installed a telecommunications system in Iraq by turning a blind eye to UN sanctions. So the Chinese government denied, supporting the local company. The US insisted.

It was the beginning of a tense relationship that a decade later would not matter at all to the millions of American users and the Western world who enthusiastically bought Huawei smartphones for their great performance and price.

And that 18 years later, it would re-emerge with a new indictment by the Donald Trump administration on the suspicion that the Chinese company would now be violating trade sanctions in another Middle Eastern country: Iran.

But it also had problems with other technology giants, mainly because of accusations of copying products and allowing others to invest in R & D, and then offer a cheaper technology offer.

In 2003, Cisco sued Huawei Technologies and its subsidiaries Huawei America Inc. and FutureWei Technologies Inc. for illegally copying the intellectual property of that California company.

And despite the fact that the Chinese company has made alliances with IBM, Siemens or Symantec and other big companies, it has always been in the sights of technology giants who are jealous of their intellectual property.

Today, Huawei is the world's largest provider of telecommunications network equipment and the second-largest smartphone maker, with revenue of about $ 92 billion last year.

Unlike other large Chinese technology companies, it conducts a large part of its overseas business and is the market leader in many countries in Europe, Asia and Africa. In other words, a true symbol of the political-commercial mix of the Chinese model.

Although in the Western world many have remained loyal to the Apple brand, since Huawei entered the world of smartphones after 2010, consumers saw in their teams a more pragmatic and ideal acquisition to take selfies, surf the internet and not worry about the for the device.

Something like the best of the worlds of Apple and Samsung, but in a brand new and young. On the other hand, Huawei has created a marketing strategy rarely seen in the history of advertising.

At the end of August this year, Huawei achieved one of its most important goals. Outperform Apple in global smartphone sales, ranking second after Samsung.

The Chinese manufacturer sold about 54 million handsets in the last quarter, 40% more than in the same period of 2017, according to studies by IDC, Canalys and IHS Markit. A true success story of the development model of the People's Republic of China. An heir to the "giant doorstep" policy of the East Giant.


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