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Its willingness to serve places Western firms steer clear of is also a factor: who else besides Huawei would wade through malarial swamps in Africa and haul base stations up the flanks of Colombian mountains? Mr Ren knows this.
How did a private Chinese firm come to dominate the world’s most important emerging technology?
Concerns about Chinese meddling would not go away. That may sour relations. Not a bit of it, he says.
He claims that Huawei has found alternative suppliers for its network-infrastructure business that are unaffected by its blacklisting by America. He denies that the company will make a loss in the coming year. Nonetheless, the consumer business is under pressure.
The Aussies aren’t sure
So did an outsize share of profits. This business is in deep trouble. Phones that Huawei sells outside China are desirable communication devices largely thanks to proprietary software available exclusively from Google. Mr Ren says that Google has been lobbying the Trump administration to allow it to resume supplying Huawei with proprietary Android software, but so far to no avail.
Unless American policy changes, Huawei will remain stuck with the open-source version of Android, without any of the apps that consumers have come to expect. The Chinese firm is in the process of developing its own operating system, Harmony OS , but it will be no rival to the mature Android ecosystem for years to come. WhatsApp in particular has become a standard mode of communication in much of the world outside America.
The firm will launch the Mate 30, the first top-end phone since its blacklisting, on September 19th in Munich. Huawei claims its hardware features will buoy sales.
The Improbable Rise of Huawei
But a phone which lacks basic functions is unlikely to be a hit. A weakened consumer business would dent profits. If the Mate 30 and its successors flop, Huawei stands to lose billions of dollars in annual revenue. Similar supply-chain challenges affect other parts of its business. Its coders are busily writing software tools known as compilers and libraries, themselves used to create the software that powers all manner of electronic devices, not just smartphones but also networking gear. As with Android, Huawei would have to create its own version of these, and a technological ecosystem around them.
Such ecosystems take years to evolve, and there is only so much one company can do to stimulate this evolution, which relies on third-party developers, with their own goals and incentives. Still, the firm has plenty of cash and he says that smaller banks remain willing to lend to it. The Chinese Development Bank, which has reportedly extended credit lines to Huawei and ZTE , a Chinese competitor, in the past, may stump up if needed.
Huawei is being forced to transform itself from a company that makes and sells hardware into one that also makes many components that it used to buy from others. This kind of shift strains a firm.
Its cash cow is under threat even as it has to invest heavily to replace the suppliers and software it can no longer get from America. Join them. Subscribe to The Economist today. Media Audio edition Economist Films Podcasts. New to The Economist? Sign up now Activate your digital subscription Manage your subscription Renew your subscription. Topics up icon. Welcome, Guest. Username: Password: Remember me. Forgot your password?
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