
State Support Helped Fuel Huawei’s Global Rise - jimmy2020
https://www.wsj.com/articles/state-support-helped-fuel-huaweis-global-rise-11577280736
======
naruvimama
Ericsson is a dominant player in the standards committee. By making patents
that it own a part of the standard, it is able to "compulsorily" license its
patents. Through this route it now owns a lot of "essential patents".

So every time you make a call, or buy a phone you pay Ericsson a royalty.
Ideally these patents like those backing web technologies should be open. Or
at the very least expire after a limited time because it is globally enforced
by a cartel.

Ericsson has a lot of R&D labs in the western world working on core technology
related to essential patents. But do not do much outside, strangely not even
in India or China, which not only has a large pool of engineers but also
contribute substantially to the royalty.

It was only a matter of time before the Chinese figured this out. Wireless
communication R&D unlike semiconductor is mostly done through computer
simulations and experiments with off the shelf equipment and does not require
enormous upfront cost.

The genius of Huawei and the hand of China was not in subsidy but the captive
market. Huawei was refused entry into the standards club, and China threatened
to go with its own standard. This I believe started as early as with 3G
standards.

Neither "standardization by a cartel" nor "compulsory licensing" is Free
market. MS bundling IE with Windows is just peanuts in comparison. Entire
nations have no choice but to pay to this cartel.

~~~
pm90
Low cost Chinese equipment and technology was what has allowed eg India (and
many other countries Im sure) to build up the telecom infrastructure and make
cellphones available to the masses at extremely low costs. The economic and
social effects of this are simply staggering. I was around when cellphones
started being ubiquitous: many families never had a landline jumped directly
to using cellphones. It was amazing.

~~~
downrightmike
Those last to modernize will be the most modern. Skipping whole generations of
tech for the newest.

------
deforciant
In my first real IT job we were buying and installing networking equipment for
phones, internet in one big government project. It was hard to not choose
Huawei when comparing to Ericsson, they completely copied their equipment,
even the Ericsson manuals would suit Huawei while the price was 10x lower.
Obviously since it was a public tender Huawei won, it did feel wrong though.

~~~
100011
The obvious lesson for any Western state is to formally protect its critical
industries. Of course, some brain damaged opposite lesson will be taken, such
as 'China must liberalize'; good luck with that gents, LOL.

~~~
Al-Khwarizmi
US: "You must embrace the free market, open the markets, liberalize
everything, avoid protectionism. It's better for you because it's more
efficient, you will be richer, blah blah."

Western countries: "OK."

China: _applies protectionism, obtains unprecedented growth, steamrolls
markets_

US, Western countries: "Free market is obviously much better, protectionism
and planned economies are inefficient and can't work, but... but... they're
cheating!"

At least the US acts in their own interest (anarchy, i.e. the free market,
makes sense if you're the strongest). What's pathetic is that European
countries believe all the neoliberal dogmatic BS when we don't even benefit
from it.

~~~
dtwest
The idea is that if everyone plays by the free market rules, the average
country will be better off.

If every country plays by these rules except one, which uses mercantilist
tactics to win zero sum games, that one country will have an advantage.

If every country plays by mercantilist rules, that advantage will not be there
for everyone, since now the game has changed.

China's "unprecedented" growth was achieved by Japan and Korea during their
peak growth period. Britain was the original champion of liberalization while
the US was protectionist for much of its history. The EU is still quite a bit
richer than China and has done well during this liberal period since nearly
destroying itself in WW2. There are so many details you are choosing to
ignore.

------
jimmy2020
A Wall Street Journal review of Huawei’s grants, credit facilities, tax breaks
and other forms of financial assistance details for the first time how Huawei
had access to as much as $75 billion in state support as it grew from a
little-known vendor of phone switches to the world’s largest telecom-equipment
company—helping Huawei offer generous financing terms and undercut rivals’
prices by some 30%, analysts and customers say.

~~~
bjornjaja
Someone’s gotta put up the great surveillance blanket of China

------
thecleaner
I don't understand why this is written in a complaining or condescending tone.
I think it is true for any state that manufacturing be provided protection
especially in its infancy. One great thing which China did was to protect
their infant industry while simultaneously weeding out non-performers based on
global competitiveness. This kind of discipline is really important to build
up the skills required to become globally competitive. I think it is better to
have regulated free trade first and then open markets once you are
competitive. This IMF doctrine on open your freaking markets it is awesome is
very stupid. Africa has completely open textile markets, that didn't really
work out very well for them.

~~~
100011
> I don't understand why this is written in a complaining or condescending
> tone. As per liberal understanding of history and progress, China was
> supposed to 'open up'(the silent part: to be open for exploitation by West).
> China was not supposed to become global techno-military challenger against
> Trans-Atlantic alliance. Oops, they did.

~~~
corporate_shi11
"exploitation"... I guess you consider trade and mutual investment
"exploitation". China's integration into the global system was both for their
benefit and our benefit.

~~~
100011
"China's integration into the global system was both for their benefit and our
benefit."

American manufacturing unavailable for reply.

~~~
pm90
American consumers with limited purchasing power benefiting immensely from low
cost goods say hello.

~~~
100011
Trading the integrity of military supply chain and infrastructure development
for little hedonistic comfort is what'd I'd expect from end-stage liberalism.
Just call it what it is, surrendering.

~~~
pm90
Except nobody did that. Defense manufacturing and procurement is still heavily
based in the US and the West. Consumer goods manufacturing, not so much.

~~~
100011
> "Hickey told a story of how the United States is even losing its submarine
> fleet. He had a conversation with an admiral in charge of the U.S. sub fleet
> at the commissioning of the USS Illinois, a Virginia-class attack submarine,
> who complained that the United States was retiring three worn-out boats a
> year, but could only build one and a half in that time. The Trump military
> budget has boosted funding to build two a year, but the United States no
> longer has the capacity to do high quality castings to build any more than
> that. The supply chain that could support such surge production should be in
> the commercial world, but it has been offshored to China."
> [https://www.theamericanconservative.com/articles/americas-
> mo...](https://www.theamericanconservative.com/articles/americas-monopoly-
> crisis-hits-the-military/)

.. and American infrastructure is in a state of serious decay:
[https://en.wikipedia.org/wiki/California_blackout](https://en.wikipedia.org/wiki/California_blackout)

Compare this to Chinese infrastructure and engineering:
[https://en.wikipedia.org/wiki/Artificial_island#China](https://en.wikipedia.org/wiki/Artificial_island#China)

~~~
corporate_shi11
I completely agree with you that America's manufacturing is in a deplorable
state. My original comment was just pointing out that the intention in opening
up China was for mutual benefit rather than exploitation, even though China's
ability to undercut us in manufacturing has ravaged us.

------
mechnesium
My industry forbids purchase of Chinese hardware (Lenovo, Huawei, ZTE, etc.)
over security concerns. China has targeted various organizations in my
industry and this hardware opens the back door wide open for them.

~~~
jimmy2020
legit concerns:

[https://www.bloomberg.com/news/features/2018-10-04/the-
big-h...](https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-
china-used-a-tiny-chip-to-infiltrate-america-s-top-companies)

~~~
saagarjha
That article is likely false.

~~~
jimmy2020
why is that?

~~~
saagarjha
Very strong, forceful denials from the parties involved and no followup from
Bloomberg: [https://www.bloomberg.com/news/articles/2018-10-04/the-
big-h...](https://www.bloomberg.com/news/articles/2018-10-04/the-big-hack-
amazon-apple-supermicro-and-beijing-respond)

~~~
jimmy2020
Do you expect them to admit that chinese succeeded and they've got users data?
don't think so. although i don't think china has any intention to admit the
operation. As long as the story online i believe it's true otherwise there
will be legal consequences and a lot of money to pay.

~~~
saagarjha
> As long as the story online i believe it's true otherwise there will be
> legal consequences and a lot of money to pay.

Similarly, making a statement like that would have dire legal consequences for
the companies involved if they willfully covered this up.

------
foob4r
60 of America's biggest companies paid no federal income tax in 2018 -
[https://www.cbsnews.com/news/2018-taxes-some-of-americas-
big...](https://www.cbsnews.com/news/2018-taxes-some-of-americas-biggest-
companies-paid-little-to-no-federal-income-tax-last-year/#)

"Just the 20 companies in our study reported in excess of $175 billion in
total deferred tax liabilities at the end of 2013. They do not pay any
interest to the government on this amount, even if it takes 20 years to pay
it." \- [https://www.usnews.com/opinion/economic-
intelligence/2014/08...](https://www.usnews.com/opinion/economic-
intelligence/2014/08/06/the-surprising-truth-about-oil-and-gas-company-
corporate-tax-rates)

~~~
lettergram
Deferred taxes are different than receiving funds from government. In Huawei’s
case, they also received stolen IP and granted a monopoly in certain areas.

I think it’s fair to say that’s “state support”.

Tax deferment is not “support” rather just not burdening the companies
directly.

~~~
chishaku
Subsidies and preferential tax treatment are textbook methods of state support
for enterprise.

This is acknowledged in the article with literally the first sentence.

> China’s tech champion got as much as $75 billion in tax breaks...

edit:

In any case, state support for American businesses goes _way beyond_
preferential tax treatment.

Boeing, TBTF bank bailouts, farm subsidies and bailouts, wars to open up
foreign markets, the list goes on for centuries...

~~~
lettergram
> The largest portion of assistance, about $46 billion, comes from loans,
> credit lines and other assistance from state lenders, the Journal’s review
> showed. The company saved as much as $25 billion in taxes between 2008 and
> 2018 due to state incentives to promote the tech sector. Among other
> assistance, it enjoyed $1.6 billion in grants and $2 billion in land
> discounts.

My only statement is that I wouldn’t call tax subsidies government support.
Support implies giving something to the company. Bailouts are arguably
support, not taxing a key industry is not exactly support.

~~~
chishaku
> Support implies giving something to the company.

I can understand that interpretation. From a public policy perspective though,
tax subsidies are explicit support.

Take an example that came up a lot in these forums, Amazon's HQ2 deal with NYC
and NY state. Tax incentives were the bulk of the deal.

------
uyuioi
As if state support didn’t build any American based tech\data company

~~~
cdmckay
It’s also a bit different when you’re catching up due to
interference/imperialism by foreign countries (like the US) in your country’s
affairs from the past 100+ years.

Why wouldn’t the state help develop its industries?

~~~
kiba
Just because somebody practiced imperialism against you in the past doesn't
make you free from moral responsibility.

~~~
100011
China's government is responsible only for its population. Moral
responsibility isn't universal contrary to what liberalism says. This is a
major, morally disarming agent that has turned pathological in NW Europe and
US. What imperialism taught China is what the stick-end of liberalism feels
like.

------
just_steve_h
Do any of the folks writing these articles know anything about ARPA (now
DARPA) and the US government's foundational role in funding the development of
technologies like radar, transistors, microchips, the Internet...?

Honestly, the United States scolding China's state support for their domestic
tech manufacturer is about as ridiculous as a nation founded upon human
slavery lecturing the world about human rights!

...

What?

~~~
100011
State Department fighting for Muslim rights in China while CIA drone operators
bomb them in Middle East is true schizo-politics.

------
intosh
The state has always been a major contributor the long term major tech
innovation and evolution.

Private enterprise contributes to the “last mile” but grabs all of
recognition. AI is the latest example of this. The Googles and Facebooks of
this world have been hoarding AI researchers and experts who have been working
on AI for the last 30+ years thanks to public money.

The US DoE invested in Tesla Motors when not a single private investor dared
to touch it.

But the masses are not only too ignorant to recognize the state’s major role
and contribution, they religiously believe private enterprise alone made it
all possible and that the state is a roadblock.

------
adventured
[https://outline.com/UGYFJ3](https://outline.com/UGYFJ3)

------
geofft
How dare China, a communist government, give a private company billions of
dollars in tax breaks? Here in America, where we value free markets and
democracy, we always tax our companies heavily, at the tax rate that Nature
demands.

This is why we can't let communism come to America - the Reds just want to
lower our corporate tax rates.

------
Bostonian
If a foreign government subsidizes a company that "dumps" its products at low
costs on our markets, I think we should pocket the gift and focus on other
industries. The overall benefit to consumers outweighs the loss to the
affected domestic industry.

"In 1962, Milton Friedman made the case for unilateral free trade as the best
and fastest path to economic prosperity" [https://www.aei.org/carpe-
diem/in-1962-milton-friedman-made-...](https://www.aei.org/carpe-
diem/in-1962-milton-friedman-made-the-case-for-unilateral-free-trade-as-the-
best-and-fastest-path-to-economic-prosperity/)

~~~
NeedMoreTea
Of course he did. All nations make the case for free trade _after_ they have
arrived, to pull away the ladder they used to get there.

See Bad Samaritans: The Myth of Free Trade and Secret History of Capitalism by
Ha Joon Chang. Highly recommended read.

[https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Fr...](https://en.wikipedia.org/wiki/Bad_Samaritans:_The_Myth_of_Free_Trade_and_the_Secret_History_of_Capitalism)

