Chinese tech giant Huawei wins support in Africa

By Julien Clémençot
Posted on Tuesday, 11 June 2019 13:55

A Huawei logo is seen outside the fence at its headquarters in Shenzhen, Guangdong province, China May 29, 2019. REUTERS/Jason Lee

Faced with US sanctions, the Chinese giant continues to enjoy the trust of African countries and operators on the continent.

Having long been on the receiving end, Chinese telecoms giant Huawei has decided to hit back. On 28 May, the company’s management filed a motion with a Texas court to amend a complaint filed in March, seeking to overturn the ban on its products by the US federal government.

For several months, US President Donald Trump has accused the company of using its technology for Chinese government-sponsored spying, a claim the Huawei has consistently denied.

To make matters worse, Donald Trump put Huawei on a US blacklist in May, banning American companies from doing business with the Shenzhen-based firm starting 19 August, unless they first obtain US government approval.

  • As a result, major tech firms such as Google, Intel, Qualcomm and Broadcom asked their employees to stop working with the Chinese group.
  • For Huawei this was a huge blow. The company generated $105.2bn in revenue in 2018 and is the world’s largest telecom operator and the second largest telephone manufacturer behind Samsung.

Last year, the company purchased $67bn worth of components from its suppliers, including electronic chips from US companies. With the current situation, these technological solutions will have to be developed internally.

  • “We were prepared for this scenario. For our smartphones, we will be able to offer an alternative to the software that Google no longer wants to provide us in the spring of 2020,” says a company source.

Established on the continent since 1998, Huawei did not wait until the last few weeks of escalation to reassure its operator customers, as well as the African countries where it is a major supplier and has often laid thousands of kilometres of optical fibre.

  • On 28 May for example, Nigerien President Mahamadou Issoufou was in Beijing to visit the Chinese giant’s research centre.
  • In 2018, Huawei generated $5.8bn in revenue in Africa alone, 60% of which was through the sale of equipments and services and 40% through its phones. It is also a relay for China’s billion-dollar New Silk Road project.

“We have been doing a lot of research since January,” explains the source. And for the time being, the US decision will not have any impact on the group’s equipment and services division. “80% of our revenue comes from recurring contracts even though this will undoubtedly complicate the implementation of new projects,” the company source admits.

The continent is not of strategic importance to the US tech industry

“The choice of our equipment manufacturers is a long-term decision that cannot be influenced by Donald Trump’s mood swings. Moreover, Africa is not of strategic importance for the US tech industry, so I don’t expect Washington to prevent us from continuing our collaboration with Huawei there,” says a leader of one pan-African operator.

  • In West Africa, Huawei manages the Orange Group’s networks, and is one of their leading suppliers. “This is a war on global leadership,” according to the chief of staff of a minister in the sub-region. China is three to five years ahead of the US in 5G technology.
  • “5G networks are not yet relevant in Africa,” says Africa and Middle East tech analyst Guy Zibi. “On the other hand, operators will aggressively deploy 4G, particularly with Huawei. But this product line should not be affected by the US sanctions”.

In all this, African politicians and the heads of telecoms operators have preferred to remain on the sidelines, refusing to take a public stand. In Kenya and South Africa where Huawei smartphones are very popular, consumers have expressed concern about the consequences of the US measures.

While sales of the Chinese manufacturer’s high-end models are likely to suffer from this situation, its impact will be less significant in European markets. Nearly 60% of all its handset sales on the continent are for more basic phones.

Bottom line: “If the war with Washington ends with a trade agreement, which is still possible,” says the Huawei company source, “we would have benefitted from an unprecedented worldwide advertising campaign”.

This article was first published in Jeune Afrique

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