Opinion | Huawei has weathered the storm, and will rise again

By Tom Fowdy

Yesterday the Chinese telecommunications firm Huawei hosted its annual report, which is a comprehensive survey of the performance of the business and its statistics. Huawei of course has had a difficult past few years, having been subject to a relentless political campaign led by the United States which sought to cut it off from the global semiconductor supply chain, coerce other countries to ban its participation in various 5G networks and pursued a variety of stumped up criminal charges against the company in the bid to discredit it. The firm has been engaging what its leadership has frequently touted as a "struggle for survival"- aiming to adapt to the new environment and place more emphasis on its own self-reliance.

Not surprisingly, the world report reflected some of these battle scars Huawei has endured. On a year upon year basis, the firm's overall revenue declined by 28.6% the vast majority of which was concentrated in the demise of its consumer smartphone business (which lost 49.6% of its revenue). Having lost access to US-origin tech-made critical components, Huawei has not only been able to produce many smartphones but has likewise had to even sell some of its popular brands such as Honor, of which have inevitably damaged its sales and revenue.

However, not all is doom and gloom. Huawei is not a business on the verge of collapse or bankruptcy. Whilst overall revenue was down, the net profit of the company had in fact increased by 76% to 117 billion CNY. This is down to a number of factors. First of all, China's telecommunications carrier business, despite US-led pressure against it, has remained relatively stable. Huawei has continued to be one of the world's largest vendors for 5G networks in the world. Revenue here only dropped 7% in the year of 2021, with the company having made progress on networks throughout the Middle East, Southeast Asia, Africa and Latin America. The US-led attempt to get countries outside of Europe to abandon Huawei has been completely unsuccessful, with a notable failure being publicized in a botched effort to try and coerce the United Arab Emirates to dump them.

Secondly, Huawei has been reorientating the bulk of its business towards its enterprise (business solutions) sector, IT services, cloud and software. It is no surprise that this era yielded positive territory in the year of 2021, growing by 2%. Huawei has signed deals with businesses and organizations all over the world to provide various digital services and systems. Such as to name a few examples, providing a system for hospitals in Thailand, an energy storage system in Saudi Arabia, a 5G system for a mine in South Africa, a private 5G railway network in Hungary, a 4G system for Volkswagen cars and so on. In this field, Huawei has continued to be competitive, and has developed its business solutions alongside its new operating system HarmonyOS, which it claims is on over 220 million devices now.

But what of course about Huawei's future? The company continues to express resolve that it will not be hobbled by the pressure placed on it by the United States, and is aggressively investing billions into research and development. In the past decade, Huawei claims it has invested 845 billion CNY into R&D (amounting now to 22% of its annual revenue), that 54.8% of its employees work in this sector and that it holds over 110,000 registered patents. Huawei's research has focused on achieving greater self-sufficiency given American pressure.

For example, its subsidiary Hubble technologies has purchased stakes in a number of Chinese lithography, lazer and chipmaking firms in order to drive itself towards greater supply chain sufficiency, whilst it was also reported at the end of 2021 that the firm had created a new sub-company known as "Huawei precision manufacturing" which was described as being "in line with Huawei's ambition of resolving stranglehold problems ranging from chip shortages to software cuts, illustrating that the firm has a very long term vision in what it wants to achieve.

Quite clearly, Huawei is weathering the storm against it. Although facing difficulties, the company is making across-the-board efforts to rebuild its business and effectively "rise from the ashes". This comes a question of "How long can the US keep it down?" the answer is seemingly, not very long. The world should continue to monitor the range of exciting new developments from the company which continues to frame itself as a global leader in various technologies. In the end, Huawei will ultimately be stronger and more resilient in developing itself beyond the strings of American influence. The process may take years and will be more akin to a trickle than a flood, but certainly the clouds above it now have silver linings.

The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.

The views do not necessarily reflect those of DotDotNews.

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