It is true that Huawei has established a laboratory in Germany, but it is not for a 5G license

Leifeng.com reported on October 24 that Huawei will open a new laboratory in Germany. The core of the laboratory is to ensure that the equipment sold by Huawei in Germany meets local information security standards, rather than obtaining a 5G license. In addition, the laboratory will enable source code review, and Huawei hopes to pass the security review before the German 5G spectrum auction.

According to reports, the German Federal Office for Information Security (BSI) said that Huawei will open the laboratory in Bonn on November 16. Bonn is also the location of BSI and other major regulatory agencies. The news came from the government website and is basically true. However, it is obviously incorrect to say that Huawei set up the laboratory for the local 5G license.

BSI officials said the lab would facilitate source code reviews, examining programming languages ​​used to run network equipment, screening them for vulnerabilities such as "back doors" that could allow spy agencies to gain secret access.

Huawei's main partner in Germany is Deutsche Telekom, which is also the largest telecom operator in Germany. At the Huawei Connect Conference recently, Deutsche Telekom T-Systems and Huawei jointly released the cloud connection service (Private Link Access Service, PLAS) based on Open Telekom Cloud, showing that the cooperation between the two parties is quite deep. Deutsche Telekom and Huawei are also jointly conducting research on 5G commercial networks.

Recently, in response to 5G-related issues, the German Interior Minister stated that the German government is not considering banning foreign suppliers from providing 5G equipment because existing laws are sufficient to ensure security. Huawei’s establishment of a German information security laboratory is actually to better comply with local market compliance. Huawei also established a similar laboratory in the UK in 2010.

Regarding the description of compliance, Leifeng.com learned from Huawei's official website that "in 2017, Huawei continued to optimize the regional compliance supervision system, enabling overseas subsidiaries to successfully achieve compliance management goals in the face of many complex factors such as the global political, economic, and business environment; at the same time, through the construction of basic systems for overseas subsidiaries, the foundation of compliance management in the legal dimension of subsidiaries was consolidated." For Huawei, which aims to enter the global market, compliance is a hurdle that must be overcome.

Reuters pointed out that Germany's total 5G investment may be as high as 80 billion euros, or about 630 billion yuan. In contrast, Huawei's 2017 annual report put Europe, the Middle East and Africa together. In 2017, Europe, the Middle East and Africa brought Huawei revenue of 168.354 billion yuan, a year-on-year increase of 4.7%, which was also the lowest growth region for Huawei except for the Americas, which had negative growth.

For Huawei, every overseas region is very important.

The IHS Markit report shows that Huawei was the only telecom equipment vendor whose market share increased in 2017, from 25% in 2016 to 28%, becoming the world's number one. Ericsson's global share fell from 28% to 27%, and Nokia's market share fell from 24% to 23%.

From this perspective, we can see that Huawei is indeed a global company. But on the other hand, Leifeng.com checked Huawei's 2017 financial report and learned that Huawei's domestic market revenue accounted for 50.5% in 2017. It was also the first time that Huawei's domestic market revenue exceeded the international market since 2005. For a global company, a more concentrated source of income sometimes does not mean good news.

Of course, we cannot only look at the telecom equipment market when we look at Huawei. In fact, affected by the investment cycle of network construction, the overall industry situation is not good when most of the investment in 4G has been basically settled and large-scale investment in 5G has not yet started. The reason why Huawei became the world's number one in 2017 was that the extra market share was snatched from other telecom equipment vendors. In 2017, the growth rate of Huawei's operator business was only 2.5% year-on-year. In contrast, Ericsson's revenue in 2017 was 201.3 billion kronor (about 160.8 billion yuan), and in 2016 it was 222.6 billion Swedish kronor, and its revenue turned to loss year-on-year.

The year-on-year growth rates of Huawei's consumer business and enterprise business were 31.9% and 35.1% respectively. In comparison, the base of the enterprise business is not large, but the revenue of the consumer business reached 237.249 billion yuan in 2017. With the high growth rate, it is unknown whether it will catch up with the revenue of the operator business this year.

Since the beginning of this year, both the United States and Australia have expressed hostility towards Chinese telecommunications equipment manufacturers. In August, Australian authorities announced their decision to block some suppliers from participating in the deployment of the national 5G mobile network, including Huawei and ZTE. In addition, US President Trump signed the National Defense Authorization Act (NDAA), which includes new regulations prohibiting government agencies from doing business with Chinese manufacturers Huawei and ZTE.

Huawei's consumer business is in the same situation as its telecom equipment business. It is reported that Huawei's Mate 20 series has no plans to be released in the US market, and may be launched in the US market in the form of international versions of Mate 20 and Mate 20 Pro. Political rather than commercial factors have influenced Huawei's market competitiveness. At this year's Huawei Global Analyst Conference, Huawei's rotating chairman Xu Zhijun said, "The relationship between China and the United States is relatively complicated. What Huawei can do is to provide its own services to meet customer needs."

At the age of 30, the domestic market has made Huawei successful, and the foreign market will make Huawei a truly global company.

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