Here’s how Huawei hopes to bridge the U.S. trade ban

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According to Bloomberg, Huawei plans to produce and sell its smartphone designs in the United States under the banner of partners. This would allow the smartphone giant — which was banned from doing business with U.S. companies in 2019 — to resume activity in the region.

The plan is twofold. First, Huawei would transfer the licenses of its smartphone designs to a division of China Postal and Telecommunications Appliances Co., a manufacturing company owned by the Chinese government. This company would be able to overcome Huawei’s trade ban in the United States and purchase the components required to produce smartphones. Subsequently, sales of Huawei smartphones would take place under the banner of TD Tech Ltd., another manufacturing company.

Bloomberg says it learned the news from several people involved in Huawei’s internal discussion of the plan. These sources asked to remain anonymous to avoid recognition. The person sharing the information about a sales collaboration with TD Tech Ltd. adds that eventual sales partners depend on the outcome of current discussions.

Motive

A clear motive bolsters the credibility of Bloomberg’s sources. In 2019, the U.S. government accused Huawei of espionage. The organization ended up on a blacklist. U.S. companies are prohibited from doing business with Huawei. For example, Google cannot provide apps for the manufacturer’s smartphones. By the end of 2020, it became clear that Huawei’s annual sales had dropped by 24.5 percent in the United States and 12 percent in Europe.

In addition to smartphones, Huawei’s business consists of networking equipment. This branch has was excluded from the construction of the U.S. 5G network. In Europe, the relationship with Huawei is less one-sided. The European Union advises its states to share findings from studies on security risks of 5G networks, but not to exclude manufacturers based on U.S. decisions. For example, Germany allows trade with Huawei, both for its national network and consumer devices. The government decides based on national security reviews. In the Netherlands, Huawei is also involved in the construction of the 5G network. In Belgium, the latter does not apply, but consumer equipment can be traded freely.