The new set of US sanctions against Chinese telecommunications giant Huawei aim to disrupt the company’s supply chain operation as they seek to close a coronavirus-ridden 2020 with favorable outlooks. The US government’s decision to restrict Huawei’s access to parts and components without government permits severely hamper Huawei’s and original equipment manufacturers’ capacity to conduct business with Mainland China. The pushback from the United States against the Shenzhen-based telecoms company comes in the context of a big rift in China-American relations. The Trump administration placed two moratoriums on sanctions against Huawei in the past, only to slap tougher oversight regulations and sanctions against a company who’s ranked number one in the smartphone industry and is a major player in the 5G technologies segment.
The United States’ notorious absence from the 5G telecommunications industry segment gets patched very quickly in the context of the financial system. It’s easy for Washington DC to control the worldwide commercial market and disrupt Huawei’s supply of parts and components. US authorities impose restrictions on original equipment manufacturers who can produce key components for Huawei’s infrastructure.
The American protectionism against Huawei isn’t just against them, its aimed at the entire Chinese telecommunications industry, whom the Americans accuse of spying, racketeering and stealing industrial secrets. Huawei’s board of directors, corporate practices, and commercial relationships are the object of international regulatory oversight.
The US Shuns Huawei And Allies Follow Suit
The American shunning of the Chinese telecoms sector is conduct copied by other nations like Australia, who chose other providers in a submarine cable deal with the Solomon Islands, a deal which Huawei made sure to sugar-top as the manufacturer paid off bribes to a top-level politician to get a better deal and secure the contract. Another country that shunned Huawei is France. The Elysée’s mandate against Chinese telecoms in favor of European manufacturers for the installation of mobile 5G stations for catering to the demands of a bandwidth-hungry consumer implies a heavy investment on carriers and ISP providers.
Companies like Apple seek unifying hardware and software, managing to grow a large enough industry capable of manufacturing their parts, products, and services. Tech and telecommunications companies try to gain a foothold in their sectors by pushing towards independence. In that sense, Huawei faces a series of problems: They cater to a significant domestic market to which they offer high-end products, the problem is that most of those products, innovation, research, and development comes from the West. The other issue for Huawei is the corporate image perception they must face considering the regulatory probes, sanctions, and oversight inquiries presented against them by authorities and rival companies. Despite its poor track record on corporate practices, Huawei buttresses its growth in the domestic sector.