Huawei expects no relief from US sanctions, but remains confident

Founder of Chinese tech giant Huawei Ren Zhengfei says he expects no relief from US export curbs because of the political climate in Washington, but is hopeful his company will thrive as it focuses on developing its own technology.

Huawei expects no relief from US sanctions, but remains confident

Wednesday August 21, 2019,

4 min Read

The founder of Chinese tech giant Huawei on Tuesday said he expected no relief from US export curbs because of the political climate in Washington, but expressed confidence that the company would thrive because it was developing its own technology.


Ren Zhengfei also said he did not want relief from US sanctions if it requires China to make concessions in a tariff war, even if that means his daughter, who is under house arrest in Canada on US criminal charges, faces a longer legal struggle.


Huawei

Image: Shutterstock



In an interview with the Associated Press at Huawei's sprawling, leafy headquarters campus in the southern city of Shenzhen, 74-year-old Ren said Huawei expected US curbs on most technology sales to go ahead despite Monday's announcement of a second 90-day delay.  He said no one in Washington would risk standing up for the company.


The biggest impact would be on American vendors that sell chips and other components to Huawei, the biggest maker of network gear for phone companies, he said.


Washington has placed Huawei on an "entity list" of foreign companies that requires official permission to buy American technology.


"Whether the 'entity list' is extended or not, that will not have a substantial impact on Huawei's business. We can do well without relying on American companies,"  Ren said. 


Huawei Technologies Ltd., China's first global tech brand, is at the centre of a battle over trade and technology that threatens to tip the global economy into recession. 


American officials accuse the company, also the No. 2 global smartphone brand, of stealing technology and facilitating Chinese spying. Huawei denies those accusations.


Huawei's chief financial officer, who is also Ren's daughter, is fighting extradition from Canada to face US charges related to possible violations of trade sanctions on Iran. Beijing arrested two Canadians in a possible attempt to force her release.


Won't ask for favours


Ren looked relaxed and confident throughout the two-hour interview at a palatial new building in neoclassical European style where Huawei entertains customers. 


The atmosphere was a striking contrast from a June 17 news conference at which Ren compared the company to a "badly damaged airplane" and warned US sanctions would cut Huawei's projected smartphone sales by $30 billion over the next two years.


President Donald Trump has suggested controls on Huawei might be lifted if Beijing agrees to a deal on trade and technology disputes that led to US tariff hikes on Chinese imports.


Ren rejected that. He said Huawei couldn't ask for favours that might hurt the interests of China's poor majority.


"I couldn't take it if those poor people sacrificed their own interests for the benefit of Huawei," Ren said . "Maybe my daughter will suffer more. But I would rather do that instead having the poorer people in China sacrifice for Huawei's survival and development." 


The May announcement of export curbs prompted warnings that sales of Huawei smartphones and other products that use US chips and other technology could be devastated. The curbs also mean a loss of billions of dollars in potential annual sales for American vendors.


Increased focus on R&D


Even before the announcement, Huawei was working on developing its own chips, software, and other technology that might reduce reliance on American vendors. The company spent $15 billion last year on research and development, more than Apple Inc. or Microsoft Corp.


Huawei reported sales in the six months through June rose 23.2 per cent over a year earlier. Chairman Liang Hua in July said Huawei was reviewing its core products to make sure they all could be delivered to customers without American components.


"At a strategic level, the US entity list is helpful to Huawei," Ren said. He said the company had responded by eliminating "marginal, unimportant businesses or products" and focusing resources on "major products". "The whole company can focus more on our most competitive products," he said.


This month, Huawei unveiled its own smartphone operating system it said can replace the popular Android system from Alphabet Inc.'s Google.  Huawei's phones still use Android, but Google is blocked from supporting maps, music, and other services.


Earlier this year, Huawei released its own chip for next-generation smartphones and the first phone based on that chip.


Ren rarely appeared in public or talked to reporters before his daughter's December arrest. Since then, however, he has given a flurry of interviews to foreign reporters in an effort to repair the company's reputation. "I think it's working," he said.


Asked about ongoing pro-democracy protests in Hong Kong, which borders Shenzhen, Ren said the violence was "not good for society and the people" but did not affect Huawei. "There is no impact at all on Huawei's business," he said. 


(Edited by Teja Lele Desai)