8 ms·

State Support Helped Fuel Huawei’s Global Rise

75 points by jimmy2020 7y ago

intosh 7y ago
The state has always been a major contributor the long term major tech innovation and evolution. Private enterprise contributes to the “last mile” but grabs all of recognition. AI is the latest example of this. The Googles and Facebooks of this world have been hoarding AI researchers and experts who have been working on AI for the last 30+ years thanks to public money. The US DoE invested in Tesla Motors when not a single private investor dared to touch it. But the masses are not only too ignorant to recognize the state’s major role and contribution, they religiously believe private enterprise alone made it all possible and that the state is a roadblock.
mechnesium 7y ago
My industry forbids purchase of Chinese hardware (Lenovo, Huawei, ZTE, etc.) over security concerns. China has targeted various organizations in my industry and this hardware opens the back door wide open for them.
- jimmy2020 7y ago
  legit concerns: https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies https://www.bloomberg.com/news/features/2018-10-04/the-big-h...
  - saagarjha 7y ago
    That article is likely false.
    - jimmy2020 7y ago
      why is that?
      - saagarjha 7y ago
        Very strong, forceful denials from the parties involved and no followup from Bloomberg: https://www.bloomberg.com/news/articles/2018-10-04/the-big-hack-amazon-apple-supermicro-and-beijing-respond https://www.bloomberg.com/news/articles/2018-10-04/the-big-h...
        jimmy2020 7y ago
        Do you expect them to admit that chinese succeeded and they've got users data? don't think so. although i don't think china has any intention to admit the operation. As long as the story online i believe it's true otherwise there will be legal consequences and a lot of money to pay.
        saagarjha 7y ago
        > As long as the story online i believe it's true otherwise there will be legal consequences and a lot of money to pay. Similarly, making a statement like that would have dire legal consequences for the companies involved if they willfully covered this up.
thecleaner 7y ago
I don't understand why this is written in a complaining or condescending tone. I think it is true for any state that manufacturing be provided protection especially in its infancy. One great thing which China did was to protect their infant industry while simultaneously weeding out non-performers based on global competitiveness. This kind of discipline is really important to build up the skills required to become globally competitive. I think it is better to have regulated free trade first and then open markets once you are competitive. This IMF doctrine on open your freaking markets it is awesome is very stupid. Africa has completely open textile markets, that didn't really work out very well for them.
- 100011 7y ago
  > I don't understand why this is written in a complaining or condescending tone. As per liberal understanding of history and progress, China was supposed to 'open up'(the silent part: to be open for exploitation by West). China was not supposed to become global techno-military challenger against Trans-Atlantic alliance. Oops, they did.
  - Spooky23 7y ago
    That was a white lie to justify the strategic necessity and short term macroeconomic benefit of opening China. The West didn’t have a choice. A chaotic, desperately poor, nuclear armed Chinese state was a wildcard that wasn’t sustainable, which is why Nixon and Kissinger opened the door. Everything since then has been a great money grab. The price of peace has been selling off everything and shifting the “axis” of power east.
  - corporate_shi11 7y ago
    "exploitation"... I guess you consider trade and mutual investment "exploitation". China's integration into the global system was both for their benefit and our benefit.
    - 100011 7y ago
      "China's integration into the global system was both for their benefit and our benefit." American manufacturing unavailable for reply.
jimmy2020 7y ago
A Wall Street Journal review of Huawei’s grants, credit facilities, tax breaks and other forms of financial assistance details for the first time how 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%, analysts and customers say.
- bjornjaja 7y ago
  Someone’s gotta put up the great surveillance blanket of China
deforciant 7y ago
In my first real IT job we were buying and installing networking equipment for phones, internet in one big government project. It was hard to not choose Huawei when comparing to Ericsson, they completely copied their equipment, even the Ericsson manuals would suit Huawei while the price was 10x lower. Obviously since it was a public tender Huawei won, it did feel wrong though.
- 100011 7y ago
  The obvious lesson for any Western state is to formally protect its critical industries. Of course, some brain damaged opposite lesson will be taken, such as 'China must liberalize'; good luck with that gents, LOL.
  - taeric 7y ago
    Isn't that predicated on them having a lasting presence? That burning money can propel someone to the top seems given. Keeping them there, though? Granted, I would think some market protections would also make sense.
  - jimmy2020 7y ago
    that's not how things work in free markets. Not even during the cold war.
    - 100011 7y ago
      I wish you the best in trying to convince China of this abstraction called 'free markets', when mercantilism is working extremely well for them, as it did for Europe too. Free trade is installed intrastate in the Empire, such as British Empire with its colonies, but even during this era the externality that Empire projected was that of mercantilism such as East India Company adventures in China. As it is clear, 'free trade' is a weapon of the strong, and strong isn't a word to call US or Europe of 2019. Certainly nowhere near strong enough to force China for free trade regiment.
      - 7y ago
adventured 7y ago
https://outline.com/UGYFJ3 https://outline.com/UGYFJ3
uyuioi 7y ago
As if state support didn’t build any American based tech\data company
- cdmckay 7y ago
  It’s also a bit different when you’re catching up due to interference/imperialism by foreign countries (like the US) in your country’s affairs from the past 100+ years. Why wouldn’t the state help develop its industries?
  - throwaway2048 7y ago
    China was very much in a similar situation pre-WW2, significantly worse infact.
  - kiba 7y ago
    Just because somebody practiced imperialism against you in the past doesn't make you free from moral responsibility.
    - 100011 7y ago
      China's government is responsible only for its population. Moral responsibility isn't universal contrary to what liberalism says. This is a major, morally disarming agent that has turned pathological in NW Europe and US. What imperialism taught China is what the stick-end of liberalism feels like.
- 100011 7y ago
  When US still supported its non-welfare industries (and allowed smoking) they put a man to the moon.
- deleted 7y ago
  [deleted]
- Retric 7y ago
  We are talking about 75 billion for a single company, not just any support for any tech company. It’s scale that makes it interesting, like comparing a bottle rocket vs a manned spaceship.
Bostonian 7y ago
If a foreign government subsidizes a company that "dumps" its products at low costs on our markets, I think we should pocket the gift and focus on other industries. The overall benefit to consumers outweighs the loss to the affected domestic industry. "In 1962, Milton Friedman made the case for unilateral free trade as the best and fastest path to economic prosperity" https://www.aei.org/carpe-diem/in-1962-milton-friedman-made-the-case-for-unilateral-free-trade-as-the-best-and-fastest-path-to-economic-prosperity/ https://www.aei.org/carpe-diem/in-1962-milton-friedman-made-...
- NeedMoreTea 7y ago
  Of course he did. All nations make the case for free trade after they have arrived, to pull away the ladder they used to get there. See Bad Samaritans: The Myth of Free Trade and Secret History of Capitalism by Ha Joon Chang. Highly recommended read. https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Free_Trade_and_the_Secret_History_of_Capitalism https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Fr...
naruvimama 7y ago
Ericsson is a dominant player in the standards committee. By making patents that it own a part of the standard, it is able to "compulsorily" license its patents. Through this route it now owns a lot of "essential patents". So every time you make a call, or buy a phone you pay Ericsson a royalty. Ideally these patents like those backing web technologies should be open. Or at the very least expire after a limited time because it is globally enforced by a cartel. Ericsson has a lot of R&D labs in the western world working on core technology related to essential patents. But do not do much outside, strangely not even in India or China, which not only has a large pool of engineers but also contribute substantially to the royalty. It was only a matter of time before the Chinese figured this out. Wireless communication R&D unlike semiconductor is mostly done through computer simulations and experiments with off the shelf equipment and does not require enormous upfront cost. The genius of Huawei and the hand of China was not in subsidy but the captive market. Huawei was refused entry into the standards club, and China threatened to go with its own standard. This I believe started as early as with 3G standards. Neither "standardization by a cartel" nor "compulsory licensing" is Free market. MS bundling IE with Windows is just peanuts in comparison. Entire nations have no choice but to pay to this cartel.
- pm90 7y ago
  Low cost Chinese equipment and technology was what has allowed eg India (and many other countries Im sure) to build up the telecom infrastructure and make cellphones available to the masses at extremely low costs. The economic and social effects of this are simply staggering. I was around when cellphones started being ubiquitous: many families never had a landline jumped directly to using cellphones. It was amazing.
  - downrightmike 7y ago
    Those last to modernize will be the most modern. Skipping whole generations of tech for the newest.
foob4r 7y ago
60 of America's biggest companies paid no federal income tax in 2018 - https://www.cbsnews.com/news/2018-taxes-some-of-americas-biggest-companies-paid-little-to-no-federal-income-tax-last-year/# https://www.cbsnews.com/news/2018-taxes-some-of-americas-big... "Just the 20 companies in our study reported in excess of $175 billion in total deferred tax liabilities at the end of 2013. They do not pay any interest to the government on this amount, even if it takes 20 years to pay it." - https://www.usnews.com/opinion/economic-intelligence/2014/08/06/the-surprising-truth-about-oil-and-gas-company-corporate-tax-rates https://www.usnews.com/opinion/economic-intelligence/2014/08...
- lettergram 7y ago
  Deferred taxes are different than receiving funds from government. In Huawei’s case, they also received stolen IP and granted a monopoly in certain areas. I think it’s fair to say that’s “state support”. Tax deferment is not “support” rather just not burdening the companies directly.
  - chishaku 7y ago
    Subsidies and preferential tax treatment are textbook methods of state support for enterprise. This is acknowledged in the article with literally the first sentence. > China’s tech champion got as much as $75 billion in tax breaks... edit: In any case, state support for American businesses goes way beyond preferential tax treatment. Boeing, TBTF bank bailouts, farm subsidies and bailouts, wars to open up foreign markets, the list goes on for centuries...
    - 100011 7y ago
      What some are failing to do wrt. to US companies is to drop the legal fictions and instead follow the economical laws, and money. The tax-accountant fiction doesn't mean it's not economically supported (by US state). China does it more openly, in US tradition of procedural liberalism requires legal and theoretical fictions to mask what would otherwise be obvious State support.
    - 7y ago
geofft 7y ago
How dare China, a communist government, give a private company billions of dollars in tax breaks? Here in America, where we value free markets and democracy, we always tax our companies heavily, at the tax rate that Nature demands. This is why we can't let communism come to America - the Reds just want to lower our corporate tax rates.
just_steve_h 7y ago
Do any of the folks writing these articles know anything about ARPA (now DARPA) and the US government's foundational role in funding the development of technologies like radar, transistors, microchips, the Internet...? Honestly, the United States scolding China's state support for their domestic tech manufacturer is about as ridiculous as a nation founded upon human slavery lecturing the world about human rights! ... What?
- 100011 7y ago
  State Department fighting for Muslim rights in China while CIA drone operators bomb them in Middle East is true schizo-politics.

75 points by jimmy2020 7y ago

The state has always been a major contributor the long term major tech innovation and evolution. Private enterprise contributes to the “last mile” but grabs all of recognition. AI is the latest example of this. The Googles and Facebooks of this world have been hoarding AI researchers and experts who have been working on AI for the last 30+ years thanks to public money. The US DoE invested in Tesla Motors when not a single private investor dared to touch it. But the masses are not only too ignorant to recognize the state’s major role and contribution, they religiously believe private enterprise alone made it all possible and that the state is a roadblock.

mechnesium 7y ago

My industry forbids purchase of Chinese hardware (Lenovo, Huawei, ZTE, etc.) over security concerns. China has targeted various organizations in my industry and this hardware opens the back door wide open for them.

jimmy2020 7y ago
legit concerns: https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies https://www.bloomberg.com/news/features/2018-10-04/the-big-h...
- saagarjha 7y ago
  That article is likely false.
  - jimmy2020 7y ago
    why is that?
    - saagarjha 7y ago
      Very strong, forceful denials from the parties involved and no followup from Bloomberg: https://www.bloomberg.com/news/articles/2018-10-04/the-big-hack-amazon-apple-supermicro-and-beijing-respond https://www.bloomberg.com/news/articles/2018-10-04/the-big-h...
      - jimmy2020 7y ago
        Do you expect them to admit that chinese succeeded and they've got users data? don't think so. although i don't think china has any intention to admit the operation. As long as the story online i believe it's true otherwise there will be legal consequences and a lot of money to pay.
        saagarjha 7y ago
        > As long as the story online i believe it's true otherwise there will be legal consequences and a lot of money to pay. Similarly, making a statement like that would have dire legal consequences for the companies involved if they willfully covered this up.

thecleaner 7y ago

I don't understand why this is written in a complaining or condescending tone. I think it is true for any state that manufacturing be provided protection especially in its infancy. One great thing which China did was to protect their infant industry while simultaneously weeding out non-performers based on global competitiveness. This kind of discipline is really important to build up the skills required to become globally competitive. I think it is better to have regulated free trade first and then open markets once you are competitive. This IMF doctrine on open your freaking markets it is awesome is very stupid. Africa has completely open textile markets, that didn't really work out very well for them.

100011 7y ago
> I don't understand why this is written in a complaining or condescending tone. As per liberal understanding of history and progress, China was supposed to 'open up'(the silent part: to be open for exploitation by West). China was not supposed to become global techno-military challenger against Trans-Atlantic alliance. Oops, they did.
- Spooky23 7y ago
  That was a white lie to justify the strategic necessity and short term macroeconomic benefit of opening China. The West didn’t have a choice. A chaotic, desperately poor, nuclear armed Chinese state was a wildcard that wasn’t sustainable, which is why Nixon and Kissinger opened the door. Everything since then has been a great money grab. The price of peace has been selling off everything and shifting the “axis” of power east.
- corporate_shi11 7y ago
  "exploitation"... I guess you consider trade and mutual investment "exploitation". China's integration into the global system was both for their benefit and our benefit.
  - 100011 7y ago
    "China's integration into the global system was both for their benefit and our benefit." American manufacturing unavailable for reply.

jimmy2020 7y ago

A Wall Street Journal review of Huawei’s grants, credit facilities, tax breaks and other forms of financial assistance details for the first time how 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%, analysts and customers say.

bjornjaja 7y ago
Someone’s gotta put up the great surveillance blanket of China

deforciant 7y ago

In my first real IT job we were buying and installing networking equipment for phones, internet in one big government project. It was hard to not choose Huawei when comparing to Ericsson, they completely copied their equipment, even the Ericsson manuals would suit Huawei while the price was 10x lower. Obviously since it was a public tender Huawei won, it did feel wrong though.

100011 7y ago
The obvious lesson for any Western state is to formally protect its critical industries. Of course, some brain damaged opposite lesson will be taken, such as 'China must liberalize'; good luck with that gents, LOL.
- taeric 7y ago
  Isn't that predicated on them having a lasting presence? That burning money can propel someone to the top seems given. Keeping them there, though? Granted, I would think some market protections would also make sense.
- jimmy2020 7y ago
  that's not how things work in free markets. Not even during the cold war.
  - 100011 7y ago
    I wish you the best in trying to convince China of this abstraction called 'free markets', when mercantilism is working extremely well for them, as it did for Europe too. Free trade is installed intrastate in the Empire, such as British Empire with its colonies, but even during this era the externality that Empire projected was that of mercantilism such as East India Company adventures in China. As it is clear, 'free trade' is a weapon of the strong, and strong isn't a word to call US or Europe of 2019. Certainly nowhere near strong enough to force China for free trade regiment.
    - 7y ago

adventured 7y ago

https://outline.com/UGYFJ3 https://outline.com/UGYFJ3

uyuioi 7y ago

As if state support didn’t build any American based tech\data company

cdmckay 7y ago
It’s also a bit different when you’re catching up due to interference/imperialism by foreign countries (like the US) in your country’s affairs from the past 100+ years. Why wouldn’t the state help develop its industries?
- throwaway2048 7y ago
  China was very much in a similar situation pre-WW2, significantly worse infact.
- kiba 7y ago
  Just because somebody practiced imperialism against you in the past doesn't make you free from moral responsibility.
  - 100011 7y ago
    China's government is responsible only for its population. Moral responsibility isn't universal contrary to what liberalism says. This is a major, morally disarming agent that has turned pathological in NW Europe and US. What imperialism taught China is what the stick-end of liberalism feels like.
100011 7y ago
When US still supported its non-welfare industries (and allowed smoking) they put a man to the moon.
deleted 7y ago
[deleted]
Retric 7y ago
We are talking about 75 billion for a single company, not just any support for any tech company. It’s scale that makes it interesting, like comparing a bottle rocket vs a manned spaceship.

Bostonian 7y ago

If a foreign government subsidizes a company that "dumps" its products at low costs on our markets, I think we should pocket the gift and focus on other industries. The overall benefit to consumers outweighs the loss to the affected domestic industry. "In 1962, Milton Friedman made the case for unilateral free trade as the best and fastest path to economic prosperity" https://www.aei.org/carpe-diem/in-1962-milton-friedman-made-the-case-for-unilateral-free-trade-as-the-best-and-fastest-path-to-economic-prosperity/ https://www.aei.org/carpe-diem/in-1962-milton-friedman-made-...

NeedMoreTea 7y ago
Of course he did. All nations make the case for free trade after they have arrived, to pull away the ladder they used to get there. See Bad Samaritans: The Myth of Free Trade and Secret History of Capitalism by Ha Joon Chang. Highly recommended read. https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Free_Trade_and_the_Secret_History_of_Capitalism https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Fr...

naruvimama 7y ago

Ericsson is a dominant player in the standards committee. By making patents that it own a part of the standard, it is able to "compulsorily" license its patents. Through this route it now owns a lot of "essential patents". So every time you make a call, or buy a phone you pay Ericsson a royalty. Ideally these patents like those backing web technologies should be open. Or at the very least expire after a limited time because it is globally enforced by a cartel. Ericsson has a lot of R&D labs in the western world working on core technology related to essential patents. But do not do much outside, strangely not even in India or China, which not only has a large pool of engineers but also contribute substantially to the royalty. It was only a matter of time before the Chinese figured this out. Wireless communication R&D unlike semiconductor is mostly done through computer simulations and experiments with off the shelf equipment and does not require enormous upfront cost. The genius of Huawei and the hand of China was not in subsidy but the captive market. Huawei was refused entry into the standards club, and China threatened to go with its own standard. This I believe started as early as with 3G standards. Neither "standardization by a cartel" nor "compulsory licensing" is Free market. MS bundling IE with Windows is just peanuts in comparison. Entire nations have no choice but to pay to this cartel.

pm90 7y ago
Low cost Chinese equipment and technology was what has allowed eg India (and many other countries Im sure) to build up the telecom infrastructure and make cellphones available to the masses at extremely low costs. The economic and social effects of this are simply staggering. I was around when cellphones started being ubiquitous: many families never had a landline jumped directly to using cellphones. It was amazing.
- downrightmike 7y ago
  Those last to modernize will be the most modern. Skipping whole generations of tech for the newest.

foob4r 7y ago

60 of America's biggest companies paid no federal income tax in 2018 - https://www.cbsnews.com/news/2018-taxes-some-of-americas-biggest-companies-paid-little-to-no-federal-income-tax-last-year/# https://www.cbsnews.com/news/2018-taxes-some-of-americas-big... "Just the 20 companies in our study reported in excess of $175 billion in total deferred tax liabilities at the end of 2013. They do not pay any interest to the government on this amount, even if it takes 20 years to pay it." - https://www.usnews.com/opinion/economic-intelligence/2014/08/06/the-surprising-truth-about-oil-and-gas-company-corporate-tax-rates https://www.usnews.com/opinion/economic-intelligence/2014/08...

lettergram 7y ago
Deferred taxes are different than receiving funds from government. In Huawei’s case, they also received stolen IP and granted a monopoly in certain areas. I think it’s fair to say that’s “state support”. Tax deferment is not “support” rather just not burdening the companies directly.
- chishaku 7y ago
  Subsidies and preferential tax treatment are textbook methods of state support for enterprise. This is acknowledged in the article with literally the first sentence. > China’s tech champion got as much as $75 billion in tax breaks... edit: In any case, state support for American businesses goes way beyond preferential tax treatment. Boeing, TBTF bank bailouts, farm subsidies and bailouts, wars to open up foreign markets, the list goes on for centuries...
  - 100011 7y ago
    What some are failing to do wrt. to US companies is to drop the legal fictions and instead follow the economical laws, and money. The tax-accountant fiction doesn't mean it's not economically supported (by US state). China does it more openly, in US tradition of procedural liberalism requires legal and theoretical fictions to mask what would otherwise be obvious State support.
  - 7y ago

geofft 7y ago

How dare China, a communist government, give a private company billions of dollars in tax breaks? Here in America, where we value free markets and democracy, we always tax our companies heavily, at the tax rate that Nature demands. This is why we can't let communism come to America - the Reds just want to lower our corporate tax rates.

just_steve_h 7y ago

Do any of the folks writing these articles know anything about ARPA (now DARPA) and the US government's foundational role in funding the development of technologies like radar, transistors, microchips, the Internet...? Honestly, the United States scolding China's state support for their domestic tech manufacturer is about as ridiculous as a nation founded upon human slavery lecturing the world about human rights! ... What?

100011 7y ago
State Department fighting for Muslim rights in China while CIA drone operators bomb them in Middle East is true schizo-politics.