The Unfinished Story of Huawei: Phones, 5G, and “Harmony” at the Heart of the Trade War

The story of Huawei is one of future tech, machismo corporate culture, and the seeds of global schism. Until recently, the name was nearly unknown of outside China; but with near-daily reports emerging on the trustworthiness (or lack thereof) of Huawei’s technology, the company has taken center stage in one of the most important geopolitical conflicts of our day.

So how did a Chinese telecom manufacturer jump from domestic obscurity to becoming the global leader in 5G technology, the second largest smartphone manufacturer in the world, and a byword for unchecked Chinese power? Here’s a backgrounder on Huawei’s path, and how a mixture of its roots, connections, and successes thrust it into the crosshairs.

THE BEGINNINGS – TELECOM CHAMPION

The origins of Huawei go all the way back to the early days of China’s economic reform, when the time for developing telecom infrastructure was ripe and international companies ruled the roost in major Chinese cities. A group of entrepreneurial friends led by former PLA engineer Ren Zhengfei wanted to compete, so they founded Huawei 华为, literally “Chinese achievement”, in 1987.

Their first move was to go where the big companies weren’t — the countryside. Building up around the cities and placing a strikingly large proportion of investments into R&D allowed them to expand quickly, and to do so (save alleged theft) without leaning heavily on foreign technology.

This was their game throughout the early to mid-’90s, and blended with quality service and government support, it was a success. By the turn of the millennium, they were the domestic champion in the realm of networking equipment, and next, they turned their sights beyond China.

Developing countries came first, which, like the Chinese countryside, weren’t staked out by the telecom heavyweights of the world. They were playing catch-up, but Huawei’s quality equipment and cheap prices made for speedy growth, and soon they were involved in over 70% of 3G expansions around the world.

In 2009, they had a breakthrough. Fledgling fourth-generation wireless networks were being deployed at the time, and Swedish phone giant Teliasonera was looking for someone to do the job. To the surprise of many, they skipped out on nearby big leaguers in favor of a more distant player: Huawei.

The Chinese telecom company was no longer playing catch-up. They looked beyond 4G, and in 2013 they announced a 600 million USD investment into 5G by 2018 with an expected commercial rollout by 2020. As the current leader in the next-gen technology, their investment seems to have paid off.

But telecom equipment isn’t the only realm of communication technology they’ve been active in. After a few years of success, they decided (with some nudging), to take a stab at something else they’ve now achieved near dominance at: mobile phones.

MOBILE PHONE GAME

One WeChat author calls Huawei’s mobile phone history a “hardcore straight guy origin story”, hinting at the hard-headed, eat-or-be-eaten mentality of the tech giant (the Chinese phrase “straight guy” here is referring to a no-frills, results-oriented nature, not sexuality).

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Perhaps the hardcore straight guy, Huawei CEO Ren Zhengfei, adamantly resisted entering the mobile phone market at first, shrugging off suggestions from the Ministry of Education and chewing out managers who came to him with the idea. But thanks to relentless pushing from executives, eventually he cracked, and they put out their first low-profit, unbranded mobile phone in 2004.

It wasn’t until the advent of the Chinese smartphone industry, around 2010, that the company began manufacturing high quality, self-branded phones. At the time, a horde of Chinese smartphone companies were popping up — like Meitu, OPPO, VIVO, and most notably, Xiaomi — and all of them would need to fight in order to separate themselves from the pack.

For Huawei, it was a bumpy road at first. Competitor Xiaomi burst onto the scene with the release of their first smartphone, the Mi 1, in 2011. The phone sold millions of units over the following year, and its success helped China become the world’s largest smartphone market overnight. Huawei’s first smartphone, on the other hand, was a different story.

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Dubbed the Ascend P1, the first in a long line of P series phones (they are now up to the P30), the ultra-slim device received praise from some but suffered from underwhelming sales numbers and was, overall, a disappointment for the until-then untouchable telecom giant.

They had to make a change, and while Xiaomi forged ahead with consumer hype on their side, Huawei scrambled to up their game in the sphere of mobile devices. Initially they put out a series of low budget Ascend Series options like the D, G and Y, but in 2013 they went for something a tad classier, and bigger: the Ascend Mate.

A supersized smartphone with a lengthy battery life, the Mate helped rework Huawei’s reputation as more than just a budget smartphone maker. This, along with a successful P6 that came out that same year and a focus on photography (eventually working with renowned camera brand Leica for lenses), gave Huawei a much-needed reboot in the eyes of consumers.

Huawei phone models

But they were still trailing the mid-to-low-range smartphone maker Xiaomi, who despite being labelled an “Apple copycat” abroad, came to surpass the American company, as well as South Korea’s Samsung, in domestic markets, to become China’s top-selling smartphone brand in 2014. The global market was reacting well to Xiaomi too, as they had even clawed their way to number three internationally. But telecom star Huawei wasn’t far behind.

That same year, the nearly three-decade old company launched a sub-brand, Honor, and its flagship Honor 6 quickly established itself as one of the most high-quality budget smartphones on the market. Packed with notable specs and targeted at younger “digital natives”, the brand was able to reach a set of consumers that were typically out of Huawei’s reach.

Within two years, Huawei had swapped places with Xiaomi in the rankings. Two years after that, they leapfrogged Apple, and currently are breathing down Samsung’s neck, self-assuredly predicting their ascent to number one in the world by 2020.

Most recently, Huawei’s 5G foldable Mate X, a smartphone-tablet hybrid with a serious price tag, has made waves in tech media — but the release of such a device produced only a ripple in the whirlpool of news that has encircled the tech company in recent months.

BREWING SCRUTINY ERUPTS

US suspicions of Huawei go back to long before the face-off we’re seeing unfold today. But between the dawn of 5G technology and the trade war between the US and China, the deterioration of the company’s standing across the Pacific has only accelerated.

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It really wasn’t until 2018 — a landmark year for Huawei’s smartphone sales that was filled with harbingers of imminent political pushback — that things took a dramatic turn.

In December, Huawei CFO (and daughter of Ren Zhengfei) Meng Wanzhou was arrested in Canada for allegedly lying to US banks about the company’s business dealings with Iran. Currently free on bail in Vancouver, Meng awaits an extradition hearing scheduled for January 2020. In the meantime, her historically spotlight-averse father has stepped out from the shadows to speak against the heightening scrutiny.

One month later, a Huawei employee was arrested in Poland for alleged espionage, and two months after that, two employees were expelled from Denmark, further embroiling the company and its activities in controversy.

Since then, the US government has increased pressure on other countries, mostly in Europe, to resist using Huawei’s equipment in their 5G network expansions. They’ve also indicted the company, raided one of their labs, had them temporarily banned, and even supposedly diverted a couple of their Fedex packages.

At the root of the United States’ distrust of the tech giant are doubts about its independence.

Who do you think owns Huawei? #WhoRunsHuawei

— Huawei (@Huawei) August 2, 2019

As a company founded by a former PLA engineer that has historically enjoyed close support from the Chinese government, the US is doubtful that Huawei wouldn’t bend to the whims of Party officials to create backdoors in its equipment for spying; some have argued that such backdoors are effectively required by law and argued that the company’s links with State security services run deep.

So it is finally here: reveal day. I am proud to announce I have written a paper with help from a variety of people that comes from a massive leaked database of Chinese CV's that shows just how close Huawei and Chinese state security services are. 1/n https://t.co/Knyo4OCz5B

— Professor Howitzer Balding 大老板 (@BaldingsWorld) July 5, 2019

WHAT NEXT FOR HUAWEI?

It’s prudent to be wary of Huawei’s technology, but some believe that total resistance to adopting its equipment could lead to a grim outcome — namely, a global split in Chinese and US network technologies, or even communication technologies more generally.

5G is the future.

Take smartphone operating systems, for example. After Trump’s ban effectively cut Huawei off from Android updates, they announced the name of their own OS, Hongmeng, literally “primordial atmosphere” (but unsurprisingly given a different English name: “Harmony”). Hongmeng, which Huawei’s CEO initially claimed would be faster than Google’s Android OS and require an alternative app store, was eventually unveiled as being primarily focused on supporting Internet of Things networks. However, even though the company stated that it would continue using Android for its phones for now, that didn’t stop nationalistic Chinese press from driving some divisive points home:

If we can't use Google @Android anymore, we can use our own OS anytime if needed: Richard Yu Chengdong, #Huawei consumer business CEO https://t.co/tpkTRZrueK

— Global Times (@globaltimesnews) August 9, 2019

While a global split is the worst-case scenario, it’s undeniable that with the looming possibility of a cut-off from Western technology, Huawei will have to double-down on its own innovation. And known for its “wolf”-like survivalist mentality, that may not be the best position for the US to put it in.