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Huawei’s gift to the world

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Chinese company faces uncertain future and its demise could hurt consumers in poorer countries

Would the world be better off without China's Huawei?

The 32-year-old company is a scrappy fighter who did not play by the rules and bloomed in a country plagued by copycats, pricing pressure and poverty.

Then on Dec 12, its chief financial officer and deputy chairman Sabrina Meng was arrested in Vancouver. Not only that, but it is in danger of losing market access in the US, Australia, New Zealand, Canada and the UK.

The move to block Huawei was touted as punishment for the company's alleged violation of the US sanctions against Iran. Or it may be intended to forestall unsubstantiated claims of spying.

What is evident is that Huawei earns half its revenue from overseas. Of the 170,000 Huawei employees, 40,000 are non-Chinese.

So what will the world look like if Huawei collapses?

To understand Huawei, take these examples: When a magnitude 6.8 earthquake hit Algeria in May 2003, killing 3,000 people, expatriate managers at major multinationals all fled.

Huawei stayed.

Its engineering team completed a network migration as scheduled, ensuring communication access in the emergency.

When civil war broke out in Libya in 2011, Huawei stayed.

In the words of then-general manager Xia Zun, Huawei's goal is "to serve our customers, be they government troops or rebels … because in times of war, people need to report back home more than ever".

Huawei is no saint.

But it fits a pattern. For every market giant in China, there are hundreds of copycats.

These focus on markets ignored by multinationals, and rather than competing on technology, they develop products and distribution systems for less-affluent populations.

China's massive population enables copycats to fight, and the winners develop immense economies of scale and operating efficiency.

Through this corporate bloodshed, the scrappy copycats turn into world-class gladiators.

It is the gladiator Huawei, which innovates and leads 5G providers, that now clashes with the US.

When I visited Shenzhen in China last year, local managers explained that much of the city's infrastructure would be digitised, and that Huawei would saturate it with a 5G network.

This will lower speed issues and latency problems for computers on the network.

The computing power needed for a driverless car, for instance, can be hugely reduced if it is simply off-loaded to the city's infrastructure via the next-gen network. This is a radically different vision from Intel's. As autonomous driving takes off, more powerful microchips will be needed, and Intel could again dominate that market.

Huawei's idea for connected cars can undermine Intel's strategy in China and beyond.

For the most part, this should concern no one but China's IT industry - except that without Huawei, Apple won't have its largest international market, and Facebook won't have a well-connected India, Bangladesh or Africa to fuel its overseas expansion.

And the rest of us will have less ability to use technology to alleviate poverty, an effort that has historically been made possible by low-cost competition.

The writer is Lego Professor of Management and Innovation at IMD Business School. This article was published in The Business Times yesterday.