Huawei completed two decades of its existence in the UK market and to celebrate this achievement it launched advertising and internet campaign on Monday, 8th June. Though it was to mark its 20th year of operations in the country but was majorly aimed at building its ground in the country as the company’s future looks uncertain. Victor Zhang, Huawei’s Vice President, stated that the advertisement was designed to cut through the “noise” of the news which has been doing the rounds in recent times and also to provide the people of UK with facts relating to Huawei. “We believe the UK will definitely review this based on the facts and the evidence because the UK will take its own interests very seriously, “he added.
It has been reported that Boris Johnson, the Prime Minister of UK, is planning to reconsider the announcement he made in the month of January of partnering with Chinese tech giant Huawei in building 5G telecom technology for the United Kingdom.
Huawei is a Chinese multinational telecommunications services as well as an equipment provider. It has its headquarters in Shenzen, China and is the second-biggest smartphone maker globally, after Samsung, with a 15.2 per cent market share in the 4th quarter of 2019.
Role of Huawei in 5G
Huawei claims to have secured over 90 contracts for 5G installations globally and has reportedly filed for around 3,100 patents for 5G technology. 5G technology helps in excessively improving the rate of data download, which facilitates the real-time data download in the industrial processes, with low latency and greater bandwidth.
Is Huawei a threat?
The Chinese telecom company, Huawei has been under critical observations since 2018 after Canadian police arrested the CFO of Huawei, Meng on the accusation of violating the international sanctions against Iran. In 2003 also, the company was accused of stealing intellectual property rights from the US based network hardware maker, Cisco.
Its noteworthy to mention that none of the Chinese company is fully independent. Government interference in these companies poses a threat to countries like US, Europe and allied countries. Mr. Ren, founder of Huawei, was a member of the Chinese army, the People’s Liberation Army until 1983, for nine long years. He is also a member of China’s Communist Party. Pointing to Mr. Ren’s political background, the US has always been suspecting of Huawei helping China in spying with the help of its 5G equipment. Trump administration has placed strict restrictions on Huawei’s access to telecom technology and views it as a security risk.
UK’s Stand
Washington had accused Huawei of mistrust, claiming that its gears were used by Beijing for spying, but Huawei has constantly been denying such allegations. Trump’s administration has been insisting that the UK should ban Huawei.
At the beginning of the year, the UK Government had allowed Huawei to play a restricted role in the launch of 5G, which meant that they could only provide non-core telecom equipment such as antennas and base stations. But during the previous month, National Cyber Security Centre (NCSC) warned the UK to evaluate the risk which Huawei poses to national security.
Accepting the recommendations of NCSC, the UK had initially restricted the company to a 35% market share, and it was stated that the company’s gear must be removed from the nation’s core network. But now, Boris Johnson has issued instructions to strategize plans to curb China’s involvement in the UK’s 5G network to zero by 2023. However, the experts have suggested that it would be impossible to remove all of Huawei’s technology by the aforesaid time.
Also, there will be a severe financial impact on the British telecom companies, BT Group Plc, which was already concerned with the government limiting the participation of Huawei in the 5G network, as it was the one which was using higher than the permissible limit of Huawei equipment in the masts and towers of its mobile network.
If the Huawei has to make its way out of UK, it will result in the company replacing all that hardware with from other manufacturers. As per some recent reports, the company has selected Ericsson as the best option to replace Huawei, not only on the basis of lab performance but as per the future roadmap as well.
BT Group Plc (LON: BT. A) was trading at GBX 122.80, up by 0.62 per cent from its previous close of GBX 122.05. The company’s 52 weeks high/low range was reported at GBX 101.40 / 209.50. It was having a market Cap of GBP 12,061.23 million.
HSBC Angle
There is another angle to the development, in the passing week, HSBC Chairman, Mark Tucker, told Downing Street that if the UK banned Huawei, London-headquartered bank could face reprisals. It was involved in the controversy when it’s Asia-Pacific Chief Executive Peter Wong pledged support for Beijing’s plan to impose a national security law over Hong Kong.
HSBC was called by Hong Kong’s former chief executive C.Y.Leung for not offering support earlier, with a threat that HSBC’s business in the nation can be supplanted by banks from China.
Washington has banned US firms from doing business with Huawei and wants to ban their 5G network. Australia and New Zealand have also joined the US. It has everything to do with the Coronavirus. China’s deceptive actions regarding the handling of the pandemic have raised the question of Huawei’s authenticity.
HSBC Holdings Plc (LON: HSBA) was trading at GBX 403.30, down by 0.53 per cent from its previous close of GBX 405.45. The company’s 52 weeks high/low range was reported at GBX 370.10 / 672.50. It was having a market Cap of GBP 82,574.14 million.
