Last Visits: Huawei Could Starve Abroad Before Selling

HONG KONG (Reuters Breakingviews) – Huawei could starve to death before selling offshore assets. The Chinese telecommunications kit maker is under renewed attack from Downing Street to Washington. Founder Ren Zhengfei has pondered the divestment of intellectual property, but there are few foreign buyers for that, or for telephone or network units. Beijing will also not allow a sale that looks like a defeat. Ren’s attempts to evade the Americans’ fight with Beijing have failed. Despite protests that it is privately owned, Chinese diplomats have made it clear that Huawei’s business interests are inseparable from his government’s diplomatic agenda. And Beijing threatened to punish Britain if it gave in to Washington’s push to remove Huawei equipment from UK networks, which it eventually did. A large chunk of Huawei’s business is in crossfire: The company generated more than 40% of its $ 123 billion revenue outside of China in 2019. But with its smartphones locked from Google’s app store, its executives they cannot obtain US visas, and the certainty of sustained US pressure, the spin-off of assets abroad to preserve value seems increasingly attractive from a financial perspective. Last year, Ren himself raised the idea of ​​selling the company’s fifth-generation telecommunications intellectual property. The United States doesn’t have a 5G champion per se, but a company like Cisco, for example, could become one by acquiring Huawei patents. Westinghouse did something similar with its nuclear power technology in China. However, American officials shot down that idea. Huawei may try to sell its offshore network equipment business to Samsung Electronics, but with the Chinese out of the way, customers will welcome the South Korean giant independently, to avoid an Ericsson-Nokia duopoly. The biggest problem is home optics. Any sale could be announced by the White House as a sign that Huawei and, by extension, the Chinese government, have lost a round. Beijing cannot have that. This could explain why the company is not offloading its offshore phone business, which is crippled by Google’s tool embargo. Instead, it is driving its own operating system called Harmony, which is based on the slogan of the “Harmonious Society” of the Chinese Communist Party. It is unlikely to have a lot of Android involvement. But even if Ren, a former military man, wanted to surrender, his commanders would not leave him.