/ 6 March 2019

China wins the tech war in Africa

Despite not providing any evidence that Huawei has built backdoors into its products
Despite not providing any evidence that Huawei has built backdoors into its products, US officials have warned that allowing the company to be involved in the building of 5G networks poses unimaginable security risks. (AFP)


To understand the extent of the effect Huawei has had on information, communication and technology (ICT) in Africa, it is worth considering the major investment it has made into this sector.

In January last year, during the CES 2018 in Las Vegas, amid many product launches and reviews, a story emerged that was not well publicised in mainstream Western media. It centred on the United States president of Huawei’s consumer business, Richard Yu, lamenting the fact that Huawei was unable to forge a successful agreement with US mobile operators to launch its devices.

Yu’s statements were made against the backdrop of a complex issue. According to some media reports, the US Congress has exerted pressure on mobile operators not to do business with the Chinese telecommunications giant, so Huawei smartphones are not available from any major US mobile operator.

The reasons for this can be read in two complex and entirely different ways.

In 2012, Congress’s house intelligence committee informed the US government that Huawei was a “national security threat”, although no evidence for this claim has been made public. Nonetheless, it has been used as the basis on which to create negativity regarding Huawei and to shut out it and prevent it from forming any meaningful partnership with US mobile operators.

Another less popular view (and something that has also received little coverage in mainstream Western media) concerns Huawei’s growth and expansion.

Although the brand is familiar to many people because of its cellphone handsets, Huawei is developing technology in an array of other areas, ranging from cloud services and artificial intelligence to 5G technology.

And despite increasing controversy over whether using Huawei telecommunications equipment poses a security risk and the shutting out of its business in some countries, and even the recent arrest in Canada of one of its most senior executives, the company has continued to grow steadily globally.

In 2018, Huawei replaced Apple as the world’s second-largest smartphone seller in the June quarter, data from market research firms show. Many people claim the blocking of Huawei from entering US markets is a deliberate attempt to maintain Apple’s superiority, both internally and externally. They also see it as an attempt by the US to regain market share from a developing world competitor that has managed to produce quality technology for less.

It is also evident that the US has been partially successful in persuading its allies to cease doing business with Huawei, particularly regarding Huawei’s rolling out of 5G equipment internationally.

In France, the telecom Orange has ruled out using Huawei products in its core 5G network and Deutsche Telekom in Germany has announced that it is reviewing purchases of Huawei equipment.

The government of Taiwan has also banned Huawei products, citing concerns that the tech giant could build backdoors into its products on behalf of the Chinese government. This follows Australia’s statement that it will ban the country’s carriers from buying equipment for 5G networks from Huawei and other Chinese telecommunications companies.

A number of other countries, including the United Kingdom, Canada, the Czech Republic, Norway and Japan are re-evaluating their relationships with Huawei.

In a clear attempt to intensify the onslaught against Huawei, US prosecutors have launched an investigation into allegations that Huawei has stolen intellectual property from US companies.

Despite not providing any evidence that Huawei has built backdoors into its products, US officials have warned that allowing the company to be involved in the building of 5G networks poses unimaginable security risks, particularly because of the relationship between the Chinese Communist Party and Chinese technology companies.

These allegations have emerged amid heightened tensions between the US and China about trade, intellectual property and geopolitics.

History repeated

There is also an allegation that Huawei is selling equipment to Iran, which was behind the arrest of Meng Wanzhou, Huawei’s chief financial officer in Canada, and adds another complex layer to the negative sentiment being expressed in mainstream Western media.

The US has walked this path before. In 2017, Chinese telecommunications company ZTE declared that it would stall its operations after the US’s department of commerce banned companies from doing business with ZTE, because of its sales to Iran.

The US decided to drop the ban but only after ZTE had agreed to several penalties, including a $900-million fine (in addition to an earlier $1-billion fine), replace its entire board and senior leadership and allow a team of US “compliance co-ordinators” to monitor its compliance with US trade laws.

The US seems to be taking a tougher stance against Huawei, however, because no ZTE executives were arrested, despite the country having ample opportunity to do so.

Moreover, many have rightfully questioned the US’s unilateral actions against Huawei, especially because it is forcing Chinese companies to comply with its sanctions against Iran, which the Chinese government does not agree with.

In Africa

In 1998, Huawei launched its operations in sub-Saharan Africa when its established operations in Kenya and now has a footprint in more than 40 African countries. It is considered among the top three telecommunications companies on the continent.

In Africa, Huawei has been able to achieve what few other Chinese brands have — it has been able to shake off the negative perceptions (and stereotypes) of Chinese business on the continent.

Its strong reputation, built over 20 years, and deep penetration into African countries can be seen as a result of three core strategies:

  • Strategic pricing;
  • Building relationship with an array of stakeholders; and
  • Hiring local staff.

Social investment

In Africa, this telecommunications company has contributed to changes that have fundamentally altered the way people connect and are entertained.

Huawei is committed to answering consumer needs and in assisting countries to realise their national development strategies. This commitment, reflected by both it products and long-term programmes, has earned it the loyalty of both governments and consumers.

This was highlighted last year when South Africa’s telecommunications minister, Siyabonga Cwele, presented Huawei with an award of excellence for its contribution to the ICT sector in the country.

Huawei, through its partnerships with local network providers and governments, has boosted infrastructure in several countries and conducted Africa’s first outdoor 5G field trial.

In addition to the business imperative of improving infrastructure, Huawei has aligned its corporate social responsibility with the United Nations’ sustainable development goals and bridging the digital divide is one of its core missions. On its list of social investments is a communications base-station kit that disaster relief agencies can use in emergencies. It takes just 15 minutes to set up and can fit into a standard-sized backpack.

Huawei has also invested R72-million in an innovation and experience centre on the African continent. In addition, the company works with 160 universities around the world to train students in Huawei certification, the most recent being with the Tshwane University of Technology.

Huawei invests as much as 10% of its revenue in research and development, including in innovation centres around the world. There are currently seven, with the goal of operating 10 altogether.

Trade war

Although much of the analysis of the trade war between the US and China centres on tariffs, one of the major sticking points continues to be the US’s treatment of Chinese companies, and more specifically Huawei.

There is a growing realisation that goes beyond the tariffs, import/export restrictions, arrests and investigations. A far bigger agenda may be at play, which is centred on the domination of the information technology industry.

We are heading towards a tech cold war, in which governments will have to choose between doing business with Chinese or US tech companies. Even though many people in the Trump administration have cited claims of espionage, the indictment provides no such evidence.

But, if the tech cold war comes down to a choice between Chinese or American internets and technology, Africa’s choice has already been made. Its current internet and technology boom is in significant part because of the investment of Chinese tech companies and the sale of affordable, quality components.

Fazlin Fransman is a senior researcher for the Moja Research Institute