Putting Europe on Huawei Highway

Huawei Technologies Co is expanding its presence in Europe, after the United Kingdom and the European Union decided not to exclude the Chinese telecom giant from their 5G networks.

The Europe expansion would be in line with Huawei's plan to ramp up its investments in the region.

The company has been exploring Europe for 20 years now. Huawei founder Ren Zhengfei sees the continent as the company's home away from home.

Huawei said it plans to spend 200 million euros ($221 million) to build its first European manufacturing plant in France. The factory will specialize in 4G and 5G equipment, and will primarily manufacture supplies for European customers.

The plan was revealed in a recent speech by Abraham Liu, Huawei's chief representative to the European Union institutions.

Speaking at the company's Chinese New Year reception in Brussels last month, Liu said Huawei believes it can partner with Europe and help the latter to achieve its digital sovereignty and become the world's digital leader.

"That's why, we decided to set up a manufacturing base in Europe, so that we can truly have 5G for Europe in Europe."

At the start of its Europe foray, Huawei was a much smaller company. Its initial push was for a research and development center in Sweden. It was keen to advance technologically.

As a tech heavyweight now, its products and services are available in more than 170 countries and regions. Some 190,000 employees are in its employ all over the world. Last year's revenue of about 850 billion yuan ($122 billion), up 18 percent, marked a record high.

But it can't rest on past laurels. Arguably, its biggest challenge in its history of 30 years has been the hostile treatment at the hands of the United States, where it faced lawsuits, trade restrictions, accusations of being a spy and attempts to ban the use of its equipment in 5G network roll-out.

In addition, the US intensified its efforts to curtail Huawei's global business. As of now, it appears as though the company may have weathered the storm in several key markets.

For instance, the EU and the UK have defied pressure from the US and decided not to ban Huawei in the rollout of their 5G networks.

Thierry Breton, the European commissioner for Internal Market and Services, said at a news conference in January that the bloc would not "ban anyone because of their name and nationality", as long as they abide by EU rules.

Huawei welcomed the decisions. Liu said: "Their (EU) emphasis on a fact-based, fair approach to a multivendor model, founded on verification as well as trust, is what we believe should be the standard globally."

Huawei already has a sprawling presence in Europe. Almost every country in the continent has a telecom operator that purchases Huawei's products.

It is not just the company that has benefited from this association. For instance, in 2018, the company boosted Europe's economy by 12.8 billion euros through its economic activity, according to a study by research agency Oxford Economics.

Huawei also supported 169,700 jobs either directly or through the supply chain, the study added.

Huawei's direct contribution of 2.5 billion euros to European GDP in 2018 is more than double that in 2014. Over the same period, the total employment supported by Huawei rose by an average 13 percent a year, the study said.

However, Huawei's overseas smartphone business was hurt after Washington restricted the company from pre-installing Google's Android operating system in its hand-held devices.

In the fourth quarter of 2019, smartphone shipments plunged more than 7 percent year-on-year, ceding the No 2 spot to South Korean rival Samsung.

Still, Huawei remains the third-largest smartphone brand in the world, according to data from International Data Corp, a market research company.

Melissa Chau, associate research director with IDC's Worldwide Mobile Device Trackers, said: "Huawei's performance continued to be strong in China, but while it has been diligently building up a presence as a top-tier smartphone player in western Europe, that's where shipments saw the biggest hit."

In response to the US move, Huawei accelerated its efforts to build its own mobile software ecosystem. At an app developer conference in London in January, the company unveiled a 20 million pound ($26.16 million) plan to support app developers in both Britain and Ireland.

Huawei said the investment will be used to encourage British and Irish app developers to make apps for its own Huawei Mobile Services mobile ecosystem and its self-developed mobile operating system Harmony OS.

Over the past year, Huawei has held numerous app developer conferences across Europe. It aims to build the ecosystem for Huawei Mobile Services, which is expected to strengthen its ability to sell smart devices in overseas markets.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said there is high chance that Google's Android will remain inaccessible to Huawei this year. Hence, the company must work hard to support its self-developed alternative.

Huawei unveiled Harmony OS in August last year, marking what some called the company's biggest push yet to build its own software ecosystem for the era of the internet of things.

So far, Huawei Mobile Services has enlisted 600 million registered users in more than 170 countries and regions. Some 72 million of them are European users, according to company data.

Last September, Huawei presented a plan in Munich, Germany, entailing a total investment of $3 billion to support software developers. The UK fund is part of this plan.

Huawei has made no secret of its determination to develop its own mobile ecosystem. Xu Zhijun, its rotating chairman, said: "We need to go all out to build the ecosystem for Huawei Mobile Services."

Xu said Huawei is likely to face stronger headwinds this year, but "we are the bamboo stalk that stands tall and proud against wind from all directions", much in the spirit of a tagline that mark's Huawei's organizational intranet: "Heroes are forged, not born."