Report on Supply Chain Compliance 3, no. 1 (January 9, 2020)
Members of the German parliament, the Bundestag, put forth a bill that would ban Huawei Technologies Co., Ltd. from all aspects of Germany’s 5G network, not just the core sensitive areas. The move is seen externally as a revolt against Chancellor Angela Merkel’s policy toward China. Merkel is seeking to balance security and economic concerns by allowing Huawei access to less sensitive, peripheral parts of the 5G network; the bill drafted by lawmakers in Merkel’s ruling coalition disagree with that policy, citing Huawei’s ties to the Chinese government as too risky to deal with.
China’s ambassador quickly responded: “If Germany were to take a decision that leads to Huawei’s exclusion from the German market, there will be consequences," Ambassador Wu Ken said on Dec. 14 at a Handelsblatt event. “The Chinese government will not stand idly by.”[1]
Huawei is facing pressure from several nations around the world for its alleged ties to the Chinese government’s espionage apparatus. Several laws in the U.S., potentially the United Kingdom and now Germany target Chinese telecom companies — if not by name — in order to protect national networks from possible hacking and espionage from China.
In related news, The Wall Street Journal reported on subsidies Huawei may have received from the Chinese government to help facilitate its meteoric rise from tiny upstart to the dominating force it is today. According to the report, Huawei “had access to as much as $75 billion in state support as it grew from a little-known vendor of phone switches to the world’s largest telecom-equipment company — helping Huawei offer generous financing terms and undercut rivals’ prices by some 30% …”[2]
Chinese officials roundly criticized the report, claiming that Western media and governments are unfairly targeting Huawei in order to lock the Chinese company out of lucrative 5G contracts.
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