Teknoku.me – In 2018, the Government of the United States (US) under the Donald Trump administration blacklisted Huawei and its affiliates on the “entity list“. Since then, the company from China could not freely do business with any US-based company.
Huawei’s global business is stumbling, especially the smartphone line, which still relies on Google as the supplier of the Android operating system that Huawei relies on for markets outside China.
According to Canalys data, in the third quarter of 2020, Huawei smartphone shipments fell by 23 percent. However, Huawei is still entrenched in the top three global smartphone vendors.
Huawei’s CEO and founder, Ren Zhengfei, finally revealed the key to how Huawei can survive amid the onslaught of US sanctions.
Operational decentralization, simplification of product lines, focus on collecting profits, and maintaining salary levels for the next three to five years, Zhengfei cited as the key to Huawei withstanding US pressure.
This was said by Zhengfei in a speech made in June 2020, but it was only revealed to the public recently.
In the speech, Zhengfei said it was difficult for Huawei to carry out the initial plan to globalize after its business was tightened by the US government.
“There is a huge mismatch between capability and strategy,” Zhengfei said, adding that his company had to start from scratch.
The Huawei founder, who has a military background, also said that the company would not lose to the US. The 76-year-old also said hundreds of Huawei cadres had voluntarily demoted their posts to match salaries.
He also said that Huawei invests 20 billion US dollars in research and development every year. However, Zhengfei said the income was only 40 percent, while 60 percent of the investment budget was said to be “burned like a candle”.
Zhengfei is indeed famous as a figure who often uses parables and philosophical language in his every statement.
Their move, according to Zhengfei, shows that Huawei has a very good team. In his speech, Zhengfei looked realistic with the situation. He said Huawei was trying to stay focused on profit.
Zhengfei also said that the US didn’t just want Huawei out of business. The first time the sanctions were imposed, Zhengfei thought that maybe his company had made a mistake and was not complying with the rules.
“But then a second and then a third attack followed. Then we realized they wanted us to disappear, but the desire to defend also motivated us,” Zhengfei explained.
Since the first sanctions in 2018, the Donald Trump administration has indeed imposed several other subsequent sanctions against Huawei.
In August 2020, the US Commerce Ministry added 38 Huawei affiliates worldwide to the entity list, arguing that Huawei was using its affiliates to circumvent sanctions preventing the export of technology from the US.
According to reports, Huawei is also prohibited from using chips from Intel. The ban came just before Donald Trump stepped down from office.
Now, the Trump administration has ended and was replaced by rival Joe Biden after winning the US election last November. According to some analysts, Biden will bring fresh air to US-China reconciliation.
However, according to Congressman Frank, US policy towards China under Biden will not simply “free” Huawei from the vortex of the US-China conflict.
One reason for this is that China’s anti-tech sentiment is likely already forming in the minds of US leaders. However, other opportunities are still wide open.