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Why Did Huawei and AT&T’s Cooperation Fall Through, Again?

摘要: The reason American politicians always threw harsh accusation against Chinese enterprises for the past few decades has nothing to do with U.S. national interest, but rather party interests or other presidential transition-related factors.

(Chinese Version)

What attracted people’s attention most on the first day of the annually-anticipated CES, however, was not some other fancy products and gadgets, but rather two other pieces of news:

  1. a) Jia Yueting’s Faraday Future showed off its FF91 at an exclusive test drive;
  2. b) Huawei and At&t’S cooperation was cancelled under the pressure from FCC.

Let us set aside the first matter temporarily and look primarily into the details of Huawei’s unexpected “loss”.

Background

It was revealed first by some foreign media near the end of 2017 that AT&T, the biggest carrier in the U.S., had signed an agreement with Huawei over launching Huawei’s latest flagship smartphone models on the American market in the first half of 2018.

The report was proved true as Huawei began to launch ads campaigns in major American cities. Later, Yu Chengdong, CEO of Huawei Consumer Business Group, also confirmed the news that Huawei would make a huge move into the American smartphone market.

It was based on the above information that some media predicted that Huawei and AT&T would reveal more details about the cooperation at the CES 2018 held at Las Vegas. However, nobody had expected that it turned out AT&T had cancelled the cooperation with Huawei and wouldn’t be selling Huawei’s smartphones in the U.S. Furthermore, it was revealed by some foreign media that eighteen congressmen co-had signed a letter to Ajit Pai, president of the FCC, asking FCC to carry out an investigation over the cooperation between AT&T and Huawei, and that this might be the exact reason why the cooperation fell through at last.

Surprise? No necessarily!

On the surface, the news might come quite unexpectedly; on second thought, however, it actually came as no surprise.

We’ve got to know that for a long time, Huawei’s entry into the American market had been under strict scrutiny by the U.S. government. As a matter of fact, Huawei’s entry had been interrupted several times in the past, and there’s really no need to enumerate on them. On October 7th, the U.S. Congress even issued a report, saying that:

Huawei and ZTE’s technology could pose a threat on U.S. national security and any investment or cooperation between them and American enterprises should be interrupted;

Huawei or ZTE’s communication devices as well as spare parts are forbidden in the U.S. government system, especially in key systems.

American internet service providers and system developers are strongly recommended to finding other suppliers. From this aspect, it seems that there’s nothing special this time. However, is it really the whole truth?

If American politicians might be disturbed by the idea of having Huawei’s communication and network devices in the government system, then why should it be a problem to let Huawei sell smartphones to American consumers? If American politicians really fear Huawei so much, why did they allow Huawei to cooperate with Google and launch Nexus 6P on the American market? Why could consumers buy Huawei’s previous flagship smartphone model via e-commerce platforms such as Amazon, BestBuy, etc.?

Moreover, other China-based smartphone makers, such as ZTE, had already entered the American market. In fact, ZTE already grabbed 12 per cent of market share in the American smartphone market during the first three quarters of 2017, ranking 4th among all the major smartphone brands and losing LG (ranking the 3rd) only by 3.4 per cent. In addition, when Lenovo acquired Motorola’s mobile business and successfully entered the American market this way, the American government didn’t say a word. How come? Things can’t be this easy.

The entire truth

On December 14th, FCC abolished the “Net Neutrality” regulation enacted in the Obama administration. Prior to this, President Trump had discarded FCC’s privacy rules targeting ISPs in April, 2017, officially overthrowing the privacy policy set out in the Obama administration. All these policies were backed by President Trump and carried out by FCC president Ajit Pai. Up with carriers such as AT&T, yet down with internet companies. Embarrassingly, however, it was also Ajit Pai who was asked by Congressmen to conduct investigation against AT&T and Huawei’s cooperation.

Previously, many Congressmen had already signed a petition that FCC’s “Net Neutrality” regulations be abolished based on CRA (Congressional Review Act). Ajit Pai himself had received two death threats personally.

On December 16th, 2017, Huawei sent Ren Zhengfei’s speech at a Panel Discussion of BPIT in an internal letter to all employees, saying that Huawei should learn from President Trump and adopt the “sunset law” to fight against arrogance and self-inflation inside Huawei.

On January 2nd, Ant Financial announced that it had given up the M&A plan towards MoneyGram because of “not receiving CFIUS’s permission even after trying different solutions and rounds of endeavors”.

The first Chinese President Trump had ever seen since his election was not a Chinese diplomat, but rather Jack Ma, founder and chairman of Alibaba Group. During the meeting, Jack Ma promised that he’d like to help American small-sized companies and farms do businesses with 300 million middle-class and create 1 million new jobs for the U.S.

When I listed the above information, I didn’t mean to speculate on the government-business relations in the U.S. My only wish is to convey to you something little-noticed by the public for your reference.

However, one thing is for sure, the reason American politicians always threw harsh accusation against Chinese enterprises for the past few decades has nothing to do with U.S. national interest, but rather party interests or other presidential transition-related factors. Chinese companies, however, fell prey to such factors and were unnecessary victim to such conflicts of party interests.

At present, we still couldn’t know for sure whether Alibaba Ant Financial’s M&A plan was vetoed for security concerns or other unknown factors.

Most importantly, this is not the end at all. For example, although the cooperation with AT&T fell off this time, Huawei still claimed that it would continue to launch new products in the American market.

In 2017, Huawei’s revenue from the smartphone business increased by 30 per cent year-on-year and reached RMB 236 billion. At the same time, Huawei and its Honor series ranked the first in China and the third around the world in terms of their annual smartphone shipment (153 million).

Sadly, however, Huawei still ranked the 8th in the American market.

…………………………………

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The article is published with authorization from the author @Wang Yunhui, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.

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