What is the problem with Chinese multinational technology company Huawei? Two things. It shows we have ignored concerns to our national security. And it promotes the idea that we can prosper without an industrial strategy. Read on to find out more.
The growth of Huawei
Huawei isn’t just a leading player in the development of 5G networks. It’s also the world’s largest manufacturer of:
- switches, and
- other telecoms equipment.
Not only that its the second-largest smartphone-maker (after Samsung). Employing 180,000 employees in 170 countries Huawei is one of the world’s top-three patent applicants.
All this is a remarkable achievement for a company only founded in 1987. Clearly then, Huawei now plays a leading role in the development of a critical technology. This has put it at the heart of the geopolitical struggle for supremacy between China and the US. But for the US and other Western nations the concern is not just related to its market dominance. It’s also about its potential threat to national security.
The involvement of the Chinese state
Huawei used to be a private company. But it’s believed the Chinese state has invested heavily in the firm. Plus Chinese law requires it to cooperate with state intelligence agencies. Huawei’s founder, Ren Zhengfei, 74, is a former engineer in the People’s Liberation Army. The firm also retains close links with China’s Communist Party. This raises fears that 5G could open a technological back door. Thereby allowing China to spy on its rivals. Or to control their communication networks. Despite this concern Huawei is now building Britain’s SG network. For me, this carries some sobering lessons.
The impact on manufacturing
For a start, it shows how diminished we are as a manufacturing force. The UK emerged from the Second World War with a technological edge. We lead the way in computers and electronics. Yet here we are, debating whether to get a Chinese firm to build our hi-tech infrastructure. Or considering if we entrust the job to Nokia, of Finland, or Sweden’s Ericsson. So much for the idea that we’d leave China to churn out cheap toys. While we focus on the clever, high-end, profitable stuff. Or that all will be well provided market forces aren’t hampered by state interference.
Above all, the benign neglect of UK manufacturing hasn’t led it to flourish, but to wither. And letting our economy grow ever more dependent on financial services has left us more vulnerable to market crashes. It has also widened the gulf between the southeast and the rest of Britain. As we now see, this has endangered national security.
The idea that we can prosper without an industrial strategy has run its course.
What do you think? Why not leave a comment below?