Huawei is taking the trade war into uncharted territory. The onslaught by President Donald Trump’s administration on one of China’s biggest companies marks a worrying turning point.
Such a relentless assault on a flagship corporate giant is virtually unprecedented. That makes everything much less predictable from here.
Huawei has been in caught in the crossfire for months. Even so, being added to a U.S. export blacklist last week dramatically worsened its predicament.
Google, for one, suspended any business with the company that requires transfer of hardware, software and technical services, except those available via open-source licensing, Reuters reported.
There was some relief when Washington announced a temporary easing of restrictions on Monday. But that offers only limited comfort. Indeed, the real worry is not necessarily about the short-term impact to earnings, for either Huawei or suppliers.
It is about the consequences of bombarding China’s 10th-largest non-financial company by revenue, one which accounts for about 0.2% of the country’s GDP, according to Capital Economics.
American officials, after all, have also been attempting to persuade other countries to drop the company for their 5G networks, and want to reel in its chief financial officer. Even if Trump relents as he did with ZTE last year – a real possibility – the damage to the company and the wider diplomatic relationship will be done.
All of this makes predicting the exact impact more difficult. For starters, the assault will deepen the gap between the two sides, and will probably persuade Beijing’s tech giants to move as much of their supply chains home as possible.
A tech cold war that heats up could trap others too: drone maker DJI is the latest to come under scrutiny. And ripples are likely to spread in unforeseeable directions.
The rules of engagement might change as well. Beijing has so far chosen to avoid escalation, in part to keep American businesses in the mainland. But Huawei could change that.
State media has recently adopted a noticeably more strident tone in its coverage, and a visit by President Xi Jinping to a rare earths producer may have been a hint of what China could do, should it choose to. Both sides still have options: winding back the clock is no longer one of them.
Have your say
More Business Headlines
- Ghana, Cote d'Ivoire resume sale of cocoa beans
- UBA unveils marketing platform for entrepreneurs
- BoG keeps policy rate at 16%
- Electric car models to triple in Europe by 2021
- Boeing to take $4.9bn hit in second quarter on 737 Max grounding
- Ghana's debt now GHS200 billion
- Gov’t urged to formulate new tax compliance rules for increased revenue
- Vodafone talks private sector relevance in SDGs at UN Forum
- Nelson Mandela Day: Barclays, ALU scholars pay courtesy call on SA High Commissioner
- Insurance industry could wield more money than banks – Rev Okosun
- Engage NIC to avoid casualties - CIIG
- Kingdom Exim Ghana, CEO awarded at Ghana Shippers Award 2019
- Enforce laws barring foreigners from retail trade - Majority Leader to agencies
- GTBank, Ria partner Zeepay to launch Ria2Mobile money transfer service
- AirtelTigo mentors 40 young aspiring entrepreneurs