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There's a lot here beyond just the hacking. Huawei was able to grow so insanely fast because they had access to a blank check and endless credit from the Chines

by api 6y ago

There's a lot here beyond just the hacking. Huawei was able to grow so insanely fast because they had access to a blank check and endless credit from the Chinese government. Nortel and others meanwhile had to finance things themselves. Private companies cannot compete with governments. Governments, especially those with sovereign currencies, can do things that private companies simply cannot do and have pockets far deeper than any private company can ever hope to have. That's why China has won the global game. Everyone else is fielding their star players, sure, but China's star players are all on 'roids in the form of endless government backed credit and many other forms of state backing. To see an American example, look at American dominance of aerospace. America has stealth fighters, probably a ton of secret stuff responsible for a good number of UFO reports, and rockets that land themselves because the US government backs promising aerospace companies generously. This has been the case since WWII. Lockheed Skunk Works is almost 100% government funded. SpaceX isn't entirely government funded but they've certainly benefited from NASA funding, NASA R&D handholding, and in the beginning got a transfer of IP related to NASA's previous research into low-cost rocket engines. Without all NASA's help I doubt they'd be where they are now. China is doing this everywhere with everything.

TedDoesntTalk 6y ago
This is why Boeing should be bailed out (but with prison time and fines that impoverish for anyone involved in the cover up)
- valuearb 6y ago
  Boeing should be forced into Chapter 11 so new ownership with clean hands can fix them. That’s the whole reason we have a bankruptcy code.
  - vaxman 6y ago
    “You can’t handle the truth!” Second favorite Nicholson quote, but so true. Seriously, Boeing will internally deal with what happened. Need proof? Ever wonder what happened to say, Rockwell International (most famous for Apollo and Space Shuttle)? Yeah, you should’a bought Boeing at $30. ((Doh!))
    - valuearb 6y ago
      I’m just glad I didn’t buy Boeing at $390. Edit: Wow I’m even more glad I didn’t buy Boeing when it bought Rockwell. That’s 24 years of only 5.5% a year compounded.
valuearb 6y ago
Kelley Johnson’s Skunk Works was successful because it rejected government controls and oversight. Read Kelley’s 14 rules of Management. Johnson had a 15th rule that he passed on by word of mouth. According to the book "Skunk Works" the 15th rule is: "Starve before doing business with the damned Navy.“ because the Navy wouldn’t relinquish control of projects to the Skunkworks. And it’s “funding” was paid contracts for performance, not an infinite credit line of free cash that Huawei got. Entirely different things. Huawei has sucked up a huge amount of Chinese resources, and there is no guarantee they’ve made a positive return, or ever will. And SpaceX is a great example, just like the Skunkworks it’s NASA funding was pay for performance. SpaceX would have been out if business without the first contract, and would not be remotely as big today without the others, but those contracts have also saved NASA billions of dollars. The vast majority of government funded projects are similar to the SLS, which has eaten up $15B+ in taxpayer funds without a launch. And when it finally launches 4+ years late it will be the most expensive launch system ever by a factor of over 2x per launch, and at least 20 times more expensive per pound than commercial launch systems. While reusing 40 year old engines!
- jariel 6y ago
  You're crossing streams here. Government backed financing for equipment sales, and government procurement for defence or large projects ... these are activities are miles apart in terms of operational realities. The Chinese government is involved to this day in financing Huawei customers. This is a big 'no no' for supposedly 'free trade' because it's a huge strategic advantage for any competitor wishing to completely dominate a market and flush out competitors. The CCP controls their national commercial banks and controls the central bank - they can direct financing to happen directly for what they perceive to the benefit of the state and make no mistake this is a lot of firepower. Imagine if the head of he Federal Reserve, and the head of Morgan Stanley were directed to make strategic loans to Cisco's customers at he behest of the President. Cash-strapped Western companies, getting really sweet financing and credit terms and 'one stop one shop vendor' from Huawei is enough to really spook everyone. Neither is it really a 'side show' issue - it's quite a fundamental thing. The financing is as important part of the equation as the product itself. Much like the financial terms on your car loan or mortgage are fundamental aspects of your terms of ownership.
blackrock 6y ago
This sounds like a more plausible explanation for why Huawei succeeded. Simply because of unlimited support and funding from the China central government, in order to get independent technology Research and Development. And plus, the financing for foreign countries, is also super important. There was talk about some African nations, only interested in buying Chinese products, simply because the Chinese provided favorable financing terms. Terms which the western countries refused to do. In this case, the western countries wanted to make as much money as possible from one deal. Whereas China played the long game, and chose to make less money per deal, but had to strike a lot more deals, to make their money. So, China made their money in volume. It seems there are different goals at play here. The countries in the west, have their national champions, and their own governments support them at a holistic and policy level. And each company tries to compete with each other to win a bigger slice of the pie. Whereas in China, their goal, is simply for technology independence from the west. So, they are willing to throw as much money at the problem as possible, in order to achieve that goal. This also harkens back to the atomic bomb analogy. That once the technology was proven to be scientifically possible, then it can be independently achieve by a foreign government, if they put enough time, money, and people at solving the problem. And here, it seems Huawei did just that.
- magicnubs 6y ago
  For this reason, I wonder if near-zero interest rates and corporate bond purchasing will ever end in the US. If it continues, isn't it kind of like the government supporting these large US corporations in the similar way? Encouraging them to take any contract or spend on any investment that returns more than 0% in interest? I'm not saying this would be "good" or "bad". I imagine it would be bad for smaller companies, but good for larger ones, maybe good for American competitiveness in world commerce (for a while) but could be bad in the long run because we'd be committing to a race-to-the-bottom price war with a competitor who has a lower bottom price than we do.

by api 6y ago

TedDoesntTalk 6y ago

This is why Boeing should be bailed out (but with prison time and fines that impoverish for anyone involved in the cover up)

valuearb 6y ago
Boeing should be forced into Chapter 11 so new ownership with clean hands can fix them. That’s the whole reason we have a bankruptcy code.
- vaxman 6y ago
  “You can’t handle the truth!” Second favorite Nicholson quote, but so true. Seriously, Boeing will internally deal with what happened. Need proof? Ever wonder what happened to say, Rockwell International (most famous for Apollo and Space Shuttle)? Yeah, you should’a bought Boeing at $30. ((Doh!))
  - valuearb 6y ago
    I’m just glad I didn’t buy Boeing at $390. Edit: Wow I’m even more glad I didn’t buy Boeing when it bought Rockwell. That’s 24 years of only 5.5% a year compounded.

valuearb 6y ago

Kelley Johnson’s Skunk Works was successful because it rejected government controls and oversight. Read Kelley’s 14 rules of Management. Johnson had a 15th rule that he passed on by word of mouth. According to the book "Skunk Works" the 15th rule is: "Starve before doing business with the damned Navy.“ because the Navy wouldn’t relinquish control of projects to the Skunkworks. And it’s “funding” was paid contracts for performance, not an infinite credit line of free cash that Huawei got. Entirely different things. Huawei has sucked up a huge amount of Chinese resources, and there is no guarantee they’ve made a positive return, or ever will. And SpaceX is a great example, just like the Skunkworks it’s NASA funding was pay for performance. SpaceX would have been out if business without the first contract, and would not be remotely as big today without the others, but those contracts have also saved NASA billions of dollars. The vast majority of government funded projects are similar to the SLS, which has eaten up $15B+ in taxpayer funds without a launch. And when it finally launches 4+ years late it will be the most expensive launch system ever by a factor of over 2x per launch, and at least 20 times more expensive per pound than commercial launch systems. While reusing 40 year old engines!

jariel 6y ago
You're crossing streams here. Government backed financing for equipment sales, and government procurement for defence or large projects ... these are activities are miles apart in terms of operational realities. The Chinese government is involved to this day in financing Huawei customers. This is a big 'no no' for supposedly 'free trade' because it's a huge strategic advantage for any competitor wishing to completely dominate a market and flush out competitors. The CCP controls their national commercial banks and controls the central bank - they can direct financing to happen directly for what they perceive to the benefit of the state and make no mistake this is a lot of firepower. Imagine if the head of he Federal Reserve, and the head of Morgan Stanley were directed to make strategic loans to Cisco's customers at he behest of the President. Cash-strapped Western companies, getting really sweet financing and credit terms and 'one stop one shop vendor' from Huawei is enough to really spook everyone. Neither is it really a 'side show' issue - it's quite a fundamental thing. The financing is as important part of the equation as the product itself. Much like the financial terms on your car loan or mortgage are fundamental aspects of your terms of ownership.

blackrock 6y ago

This sounds like a more plausible explanation for why Huawei succeeded. Simply because of unlimited support and funding from the China central government, in order to get independent technology Research and Development. And plus, the financing for foreign countries, is also super important. There was talk about some African nations, only interested in buying Chinese products, simply because the Chinese provided favorable financing terms. Terms which the western countries refused to do. In this case, the western countries wanted to make as much money as possible from one deal. Whereas China played the long game, and chose to make less money per deal, but had to strike a lot more deals, to make their money. So, China made their money in volume. It seems there are different goals at play here. The countries in the west, have their national champions, and their own governments support them at a holistic and policy level. And each company tries to compete with each other to win a bigger slice of the pie. Whereas in China, their goal, is simply for technology independence from the west. So, they are willing to throw as much money at the problem as possible, in order to achieve that goal. This also harkens back to the atomic bomb analogy. That once the technology was proven to be scientifically possible, then it can be independently achieve by a foreign government, if they put enough time, money, and people at solving the problem. And here, it seems Huawei did just that.

magicnubs 6y ago
For this reason, I wonder if near-zero interest rates and corporate bond purchasing will ever end in the US. If it continues, isn't it kind of like the government supporting these large US corporations in the similar way? Encouraging them to take any contract or spend on any investment that returns more than 0% in interest? I'm not saying this would be "good" or "bad". I imagine it would be bad for smaller companies, but good for larger ones, maybe good for American competitiveness in world commerce (for a while) but could be bad in the long run because we'd be committing to a race-to-the-bottom price war with a competitor who has a lower bottom price than we do.