Source: Sputnik News    Published: 2019-5-24

The United States, while urging other countries to join sanctions against Huawei, is dividing the global community. As a result, the rest of the world unwittingly has become a hostage to the situation, and many American partners find themselves in an uncomfortable position.

A number of countries, including Japan and the United Kingdom, are trying to manoeuvre between their interests and their desire not to offend their main political ally. Meanwhile, South Korea is openly fighting for its rights and points out that, although the US is the instigator of this conflict, its consequences must be borne by others.

Japanese mobile carriers SoftBank, NTT Docomo, and KDDI have announced that they are postponing the start of sales of new Huawei phones scheduled for 24 May and suspending pre-orders.

In the UK, EE and Vodafone refused to use Huawei smartphones for 5G networks testing. However, these and other countries are in no hurry to completely sever relations with the Chinese company.

Japan’s Panasonic, on its Chinese website, denied information released by several media sources that it was suspending the delivery of Huawei components. Panasonic emphasized that the Chinese company is its most important partner and deliveries of all Panasonic products and services will continue in full. The UK still does not exclude the participation of a Chinese company in the construction of 5G networks.

According to the Chosun Ilbo, South Korea is trying to resist US pressure, which means it must put pressure on its IT giants and not allow the spread of Huawei equipment across Southeast Asia.

South Korea claims that if they join the US boycott of Huawei, they risk becoming one of the biggest losers in this story. Just reacting to news that  Seoul is conducting a dialogue with Washington on the safety of equipment for 5G networks, the shares of the third largest Korean mobile carrier LG Uplus dropped by 6.35 aper cent.

The reason is clear: the company, which is part of the LG Corporation, has been building an LTE network based on Huawei equipment since 2012 in the capital region. And now it is deploying a fifth-generation communications network on Chinese hardware.

According to Maeil Business Newspaper calculations, the annual sales of Huawei on the South Korean market are about 200-300 billion won (170-250 million US dollars). Among the clients, in addition to the LG Uplus, there are two other largest telecommunications companies, KT and SKT.

Huawei Equipment is also purchased by the IT finance company Koscom, which ensures the operation of the Korean Exchange (KRX). Huawei technology is also used in operations by the Nonghyup financial group which ranks in the top ten in terms of assets, other customers include; the main search engine of the country Naver, Hyundai Motor Group and others. Moreover, the modernization project for the communication networks of the Nonghyup group alone involves the delivery of Huawei products worth more than 60 billion won (50 million US dollars). Dropping Huawei will entail large financial losses, a research fellow at South Korean Sejong Institute Chung Jae-hung said.

“South Korea is not a colony of the United States. And it is out of the question that the US and South Korean governments restrict transactions between enterprises of the two countries. LG Uplus and other South Korean companies use Huawei equipment because of its profitability. Will the US government compensate for the damage caused by the inability to use it? Corporations must make their own decisions; government intervention will be a mistake”.

South Korea is planning to actively introduce 5G technologies into various public infrastructures, including the implementation of an unmanned public transport system. If someone launches a malicious code into the network or performs a DDoS attack, this can paralyze the entire country’s network. But, according to Chung Jae-hung, this has nothing to do with the supply of Huawei equipment.

“If this is really an issue affecting state security, the government should look for ways to eliminate potential threats within a framework that will not interfere with the free implementation of transactions between companies. In order for the state to eliminate threats in advance, it would be a good idea to create a working group of experts from different countries in various fields. So that all interested parties could participate in the search for convincing solutions to such problems”.

Ultimately, South Korea fears a response from China in the event that the country yields to the wishes of the United States and joins the sanctions against Huawei. South Koreans still remember the PRC’s tough response regarding the deployment of the American THAAD missile defence system in the country and they don’t want to be caught again between a rock and a hard place.

The closure of the Chinese market will hit the Korean economy hard. Huawei alone purchases over 10 billion dollars’ worth of products from Korean companies per annum.

According to the Samsung Electronics report, within the first quarter of this year, Huawei ranked fourth in the list of main buyers of South Korean semiconductors. Moreover, many small and medium-sized companies produce printed circuit boards, fingerprint recognition modules, microphones, antennas, repeaters and switchboards for the Chinese telecommunications giant.

US pressure on other countries on the Huawei issue is also not very effective because much depends on private companies. And not all countries can dictate their will to business. And business, first and foremost, care about the economic feasibility of any action, Zhou Rong, a senior analyst from Chongyang Institute for Financial Study at the Renmin University of China, said.

“Some companies have followed the US orders and joined the Huawei boycott. This is quite normal. But here I would like to quote Mao Zedong, who said. “Imperialism and all reactionaries are paper tigers”.

At that time, China lived in a much more complex international environment. At the time, most of the world pursued a policy of economic isolation for China. Yet China was able to survive those times. And with the current strength of China, it can easily withstand. First of all, a so-called anti-Chinese camp has not yet been formed. And in the near future, it is unlikely to be formed because business cares mainly about making profits. Therefore, many companies simply will not act to the detriment of their own profits in order to allow themselves to be dictated to by the United States. They will start to analyze what is more profitable: to appease America or to abandon the Huawei boycott. And they will gradually come to the conclusion that taking the lead from the United States will do more harm than good. Then their behaviour will change.

In my opinion, many countries no longer take American intervention into account. For example, the position of European countries is quite obvious. A few days ago I spoke with a European scientist; he told me that Europe wants to find a middle ground between the United States and China. That is, on the one hand, to avoid possible US sanctions, and on the other hand, to continue to maintain normal trade and economic relations with Huawei.

This is a completely common viewpoint among the countries of the European Union. Japan, South Korea, and India adhere to the same principles. I believe this will continue for some time. Now mainly partner countries of the Five Eyes alliance are following the lead of the United States. These are Great Britain, Canada, Australia, and New Zealand. But besides those countries, the remaining countries in Asia, Africa, Europe, and Latin America are not very willing to agree to join in sanctions against Huawei.

It is hardly necessary to say now that after some steps, taken by a number of developed countries, a wave of Huawei boycotts will sweep across the rest of the world. At the same time, now we will see more and more responses from Huawei. In fact, many countries are waiting for what the Chinese company will do. They hope that Huawei will offer them such a solution that makes further cooperation possible and avoids them falling under US sanctions.

However, some close allies of the United States, which have developed a certain corporate culture, such as Japan, are more susceptible to pressure from the outside, said Professor Zhou Yongsheng, a Japan expert at China Foreign Affairs University in Beijing.

“Of course, Japanese entrepreneurs are influenced by the American government. They are more likely to stop business ties with Huawei but will maintain business with the United States because for them the American market is the most important source of business development and transactions. That being said, Japanese authorities will not contradict the United States. So this is a very complicated relationship. For Japan, dropping Huawei is sacrificing a pawn in order to save the queen”.

Do not forget that the topic of the Huawei’s threat is artificially inflated by many American radical politicians. Thus, Steve Bannon, a former adviser to Donald Trump, who was dismissed by Trump himself, is now trying to earn political points again, stirring up an atmosphere of confrontation.

He recently said that Huawei, like other Chinese companies, is a threat to national security not only for the United States but for all other countries. He said that abandoning Huawei is much more important than any trade agreement and noted that it is necessary to oust the company from all Western markets, including financial ones.

In response, the editor-in-chief of  Chinese Global Times, Hu Xijin tweeted that in China even the most notorious radicals are not calling for the expulsion of Apple or McDonald’s from the market. According to Hu Xijin, politicians such as Bannon turn the United States into a country of economic fascism.

Zhou Rong is a senior fellow from Chongyang Institute for Financial Study at the Renmin University of China.