The USA and China are waging a trade war. Already suffered Huawei and Apple, what next?
America threatens China with sanctions and taxation on the importation of goods into the States, but risks strangling itself. Target YouTube .com understands the alignment of forces during the period of the trade war between USA and China, also, Huawei and Apple been suffered, and explains why the opposition of countries harms their main technology companies.
Attack on Huawei – the fight for 5G in the context of a trade war?
Accurately answer the question is difficult. The United States talks about the security of the personal data of its residents and exposes Huawei as a serious threat. The Chinese company in response points to a political context. As in any process in which states are involved, no one has indisputable arguments.
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Huawei confrontation with the United States is a long history. In 2016, the manufacturer was accused of spying on users along with a number of other Chinese vendors. In the spring of 2018 – in violation of US sanctions against Iran. For the last two years, he has been publicly exposed in one or another, dirtying his reputation.
Huawei could not stand it. In the spring of this year, a top manager of the company, Guo Ping, called the US intelligence agencies hypocrites and said that the reason for their accusations is not a threat to the safety of Americans. Allegedly, under this pretext, they inhibit the development of the company so that it does not overtake the American ones.
It’s beyond 5G future, and it’s unprofitable for States to have Huawei play an important role in technology development and supply its equipment.
In response to the allegations of mass surveillance and cooperation with the special services, Ping pointed out to the United States the story of Edward Snowden. Recall, a former employee of the CIA and the US National Security Agency in June 2013 handed the newspapers The Guardian and The Washington Post secret information about the total surveillance of US special services for citizens using communication networks.
Not the first time that espionage charges have been brought against Huawei. It is important that its founder, Ren Zhengfei, is a former military engineer of the Chinese army; by the end of the service, he was the rank of deputy regiment commander. But the vendor denies contact with the special services. In general, the situation is too complicated.
What does Huawei want?
Participate in the development of 5G-networks. The company and China as a whole are actively developing in this direction. According to IPlytics, as of March 2019, the country has 34.02% of patent applications for 5G technology, while the US has only 14% of applications.
t was expected that Huawei, the world’s largest manufacturer of telecommunications equipment, will play an important role in the development of a new cellular standard.
For security reasons or to eliminate a competitor, it is not known, but the United States primarily hindered the development of Huawei in the 5G area. Intelligence agencies warned Germany against working with the company for security purposes. The country decided not to abandon the partnership with the manufacturer, but tightened the selection criteria for equipment suppliers. The company has contracts for the supply of 5G equipment worldwide, despite pressure from the United States. By the end of March, the company had 40 contracts for the supply of equipment.
Is Huawei sanctioned alone?
A year ago, ZTE fell under sanctions for violating US policy toward Iran. It hit the company even harder. She lost not only Android but also important components, like processors. Huawei is doing better with this; for its smartphones, Kirin’s chips are manufactured by its subsidiary HiSilicon.
ZTE banned the purchase of components from US companies until 2025. Immediately after the sanctions came into force, ZTE temporarily stopped selling smartphones. So much so that the manufacturer was on the verge of bankruptcy, and for three quarters suffered a loss of $ 1 billion.
Huawei can stand
The company is more stable, unlike ZTE. First, it is more significant for China, and in the event of a ban on the supply of the US, components will be followed by retaliatory sanctions. Secondly, the company is preparing its operating system in case of blocking Android.
In the smartphone market, the company will inevitably weaken. “Huawei will have to completely redo the production chain. – said analyst Mobile Research Group Eldar Murtazin. “The company will lose part of the mobile market outside of China, the question is how badly will Huawei and Honor lose it.”
How successful is the company remaking the supply chain, the question is open, says Murtazin. This is a strategically important point, the company will act as quickly as possible. Nevertheless, the expert is confident that the manufacturer will not cease to exist.
And, apparently, the company will have to leave the notebook market. “Their production will be impossible. These are Intel processors, this is the Windows operating system. The company will have to leave this market, ”continues Murtazin. The expert also believes that the manufacturer will have problems with the release of wearable devices, there are also used American components.
Information about the new operating system on the network at least. It will be called Hongmeng or Kirin OS, it will support Android applications. Huawei is looking for an alternative to Google Play. Last spring, she released the AppGalery brand, and she is in talks with Aptoide, the most popular alternative to Google Play.
With the release of its operating system, Huawei will solve the problem with its updates. In the event of a company ban, only the Android source code without updates will be available. How to solve problems with Google applications is unknown. YouTube and Gmail will be available but will remain without updates. Solving the problem – downloading APK files with updates, units will want to do it.
“The Huawei operating system is inferior to Android, but it is not as bad as expected. There are a number of workarounds for installing Android applications, but these are crutches, ”says Eldar Murtazin.
Apple suffers too
On the most famous US technology company, the confrontation between the States and China has a negative effect. The company from Cupertino loses its position in the Middle Kingdom. In the first quarter of 2019, the number of shipments decreased by 30% compared to the same period of 2018. One of the company’s objectives is to return positions. The main reason for the decline in demand is increased competition. The whole of 2018 was talking about this: users are not willing to pay more than a thousand dollars for a phone, so they choose Android flagships from local manufacturers for about $ 700.
Competition is not the only Apple problem in China. Other factors contributed to its deterioration. The first is a trial with Qualcomm and a ban on sales of a number of models. The company bypassed it with an iOS update, eliminating the elements, where it violated the chip maker patents. The second is the trade war between the United States and China. Due to the opposition, the loyalty of the audience to the American company in the Celestial Empire declined, buyers began to fanatically “drown” against it.
The situation was aggravated by the detention of Huawei Director Meng Wanzhou in Canada in December 2018. Coincidentally, right after the arrest, the ban on the iPhone in China came into force due to the infringement of Qualcomm patents. Then the local court was suspected of bias towards the manufacturer of electronics.
At the same time, local residents began fanatically boycotting the brand’s electronics, and local companies promoted this. Chinese media is positioning Huawei as an innocent victim, while the United States and American companies are envious of technological development. An example is the Zhong Sheng column from en.people.cn, where the author says that the US attack on a company is the envy of technological development.
Component manufacturer Menpad has banned employees from using the iPhone and has imposed a fine on the size of the cost of a smartphone for breaking the rules. And this spring, the “Boycott Apple” movement went on the Weibo social network, the participants of which are convinced that smartphones from local manufacturers are cheaper and not worse.
Fight China and do no harm
Immediately after the rupture of the relationship between Huawei and Google, Tom Verren, the editor of The Verge, warned the United States that counter-sanctions would follow. China can also harm local businesses.
First of all, companies may lose important imported components, which are usually purchased in China. This applies not only to consumer electronics. Rare earth metals are also supplied to American companies. The South China Morning Post has already announced that stopping their deliveries could be a response to US sanctions against Huawei.
“US sanctions against Huawei will hurt everyone. The world is very dependent on each other, says Eldar Murtazin. – Google may lose the app store. The new operating system Huawei – a threat to its dominance. It will probably be distributed in Asia, and other countries. Perhaps we will see the active development of various alternative systems. This is necessary to protect against such phenomena. “
In addition, the fight against China may lead to higher prices for American products. Donald Trump is considering introducing a 10% tax on goods from China. The trouble is that in the Celestial Empire, Apple electronics are assembled at the Foxconn plant. If the law is passed, the state will again harm local businesses – the company will have to raise the price of devices to recoup the cost of taxes.
For the same reason, brands of sneakers and other shoes asked Trump to ease trade relations.
The appeal was signed by 173 manufacturers, including Nike, Adidas and Under Armor.
According to their calculations, the new duties will cost US citizens $ 7 billion annually. Also in China, there is a Tesla plant, in the construction of which the concern has invested hundreds of billions of dollars. The increase in costs is clearly not what Ilona Musk needs, whose position is already critical lately.
The introduction of state duty, in any case, will harm American companies. Even if production is transferred to other countries, vendors will spend more money. The plants are located in China primarily because of the great financial benefits – in any other country, production will require more money.
The United States and China have reached the point where every action will hurt the business and their opponent. Therefore, most likely both sides will behave cautiously. The states have already shown that, following sanctions against Huawei, there will be a response that will shake the position of American business. Whether the license will be returned to the Chinese manufacturer is impossible to predict.