Free trade will serve the global economy well if it is practiced with a sense of fairness, not when its purpose is abused by nations seeking to boost their coffers and have hegemonic control over its impoverished partners on the sly.
Put simply, free trade is welcome, not free fraud.
American companies such as Cisco are themselves to blame for being lax in protecting their own patents and enabling the unchecked rise of Chinese companies such as Huawei.
Compromising their long-term business interests for near-term contractual wins in China has not just affected their prospects but also gone against the grain of true competitive spirit.
Trying to win deals at any cost is not an ethical practice.
Now even as China is claiming readiness to crack down on IPR infringements, its sincerity is doubtful. Possibly in the same vein as U.S. President Donald Trump’s trade restrictions on China, given the business interests of his family in the country. It had all the trappings of a political gimmick when he kicked of the moves to rein in China, though it slowly gained credibility without any let-up until the recent truce.
The arrest of Huawei’s CFO in Canada has seen markets take a deep hit worldwide the last two days. I am not surprised as, in my view, Wall Street is the epicentre of international fraud with analyst commentaries and reactions often verging on market manipulation, making them sway to their tunes with eloquent positioning.
Markets and analysts are reading too much into the arrest of the Huawei CFO, assuming that this may put the temporary truce between the U.S. and China in jeopardy. That is giving too much importance to Huawei, even if its founder (Ren Zhengfei) is an ex-People’s Liberation Army officer. The CFO, Meng Wanzhou, is his daughter and likely successor.
Western fears about Beijing strengthening its spy network through use of Huawei’s equipment in 5G communications networks are not unfounded. The fact that China reacted with anger to the arrest only offers grist to the fears.
These fears are manifesting itself in actions from countries keen to keep espionage at bay. Japan today decided to ban Government purchase of equipment from Huawei as well as ZTE, another Chinese network supplier. Similar curbs are in place in Australia, New Zealand and the U.S. Two days ago, BT announced it would not use Huawei’s 5G gear in its network.
Per a Reuters report today, the arrest of Meng Wanzhou was designed to be part of “an investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran.”
The ramifications for Huawei are wide and serious, hence the paranoia in Beijing. Huawei, the CFO and China may still come out of the tangle soon even without any resolution to the issues at stake.
A few of my old posts on network vulnerabilities
G Joslin Vethakumar