The US Trade Department added Huawei and 70 affiliates to its “Entity List” in mid-May. Membership of the Entity List effectively bans US companies from dealing with these foreign businesses without explicit approval from the US government. The move came after increasing trade tensions between the US and China, and security concerns about Huawei’s role in the provision of equipment for 5G mobile networks.
This isn’t about security, tariffs or even Huawei itself. This is about IP, IP theft and the loss of technology leadership.
China has been ripping off IP for years (CNBC Survey, IP Commission, Titanium Dioxide) and to a greater or lesser extent, it’s been allowed to get away with it. Everyone’s known about it, but few governments seem to be prepared to do anything about it.
Consumers have been complicit in this too. With websites like Gearbest and Alibaba selling directly from China, how many of us have bought cheap Chinese knock-offs because we wanted to save a buck? Look at action cams – why do they all look like GoPros? Try this search if you don’t believe me.
China has been through stages of economic reform since the mid-70s and has seen unprecedented growth of over 9% per annum up until 2013 as the private sector grew. With the opening up of the country, US companies see fat profits selling to the 1.3 billion Chinese citizens. China has used this to its advantage too, forcing companies to manufacture on the Chinese mainland where it’s even easier to steal the tech and learn how to make it.
Finally, there’s the realisation in the West that we have virtually gifted our IP and tech know-how to a new superpower for cheap gadgets and quick profits. The penny has dropped only when a key piece of communication infrastructure for the next generation of mobile networks is coming from a Chinese company and Huawei is bearing the brunt.
I doubt there’s any real evidence of backdoors – President Trump let the facade slip somewhat when linking Huawei to a trade deal despite describing them as “very dangerous” – but yes, there is a risk of foreign state espionage and interference. The Russians do it, the Israelis do it, the British do it, the US does it and of course, the Chinese do it.
By letting IP theft go unpunished at an international level, the door’s been left open for Chinese firms to continue doing it, and build on that IP to create the best products. Yes, they sometimes get caught, like Huawei, but it’s still massively profitable.
We’ve only ourselves to blame.