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CHAPTER 3

March into the Global North

Opportunity or Peril?

As a result of the strategy of “circling cities from the countryside,” Huawei has gained a firm foothold in emerging markets since the early 2000s. However, the company has still sought vast opportunities in developed countries where telecommunications markets are larger and more lucrative. The company’s penetration in the South can be viewed as a springboard for its further plan of expansion into developed countries, which prepared the company to foster competitive edge in international markets. But in contrast with the company’s massive success in the South, Huawei’s march into the global North was faced with numerous difficulties and challenges. This chapter looks at Huawei’s presence in two different regions —the European and US markets—to examine the dynamics and limitations of Chinese capital’s expansion into the global North. The conflicts and contradictions arising from the Chinese ICT firm’s counterflow into developed countries underscore inter-state and inter- capitalist competition and the potential for Chinese capital to challenge the US-led global capitalist order in the centers of the capitalist system. Over the last decade, major global telecom equipment giants have experienced several

dramatic changes of restructuring. Traditional Europe-based transnational companies undertook mergers, cross-border investments, joint ventures, and alliances with extra- regional TNCs to consolidate their domination in the market. In April 2006, France-based Alcatel merged with US-based Lucent, paving the way for Alcatel’s expansion into the American telecom market. In the same year, Finland’s Nokia and Germany’s Siemens merged their network telecom equipment businesses in a joint venture. But this merger did not last, and Nokia bought out the shares of the joint venture from its German partner in 2013. In the following year, Nokia sold its mobile businesses, which had been the company’s most profitable business unit, to Microsoft. But two years later Nokia’s devices business was sold again to Foxconn’s subsidiary. To strengthen its core businesses in the telecom network market, especially in reaction to heightened competition from new market players such as Huawei, Nokia announced its acquisition of Alcatel-Lucent in April 2015. Such a “mega- merger” changed the market structure and dynamics dramatically, stimulating a new wave of industrial restructuring. In November 2015, Ericsson and Cisco, two tech giants in the telecommunications sector, decided to establish a strategic partnership to merge the services of telecom networks and data communications as a response to rising competition from Huawei and the merged Nokia-Alcatel-Lucent conglomerate. Nevertheless, it should be noted that restructuring through convergence and “deconvergence” is primarily a corporate

Wen, Yun. The Huawei Model : The Rise of China's Technology Giant, University of Illinois Press, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/washington/detail.action?docID=6404643. Created from washington on 2020-12-15 15:26:53.

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response to market failure and a scheme of battles for position in the industry rather than a solution to the systematic crisis. Such a pattern of capitalist restructuring is primarily driven by the long-established transnational powers that tend to sustain their dominance in the face of new market comers. To the greatest extent, the scene of global restructuring in the telecom industry has set the backdrop for Huawei’s march into developed countries. Although Chinese ICT corporations have displayed considerable appetite for participating

in transnational capitalist markets, they encountered numerous conflicts and obstruction from capitalist rivals and states. The arrest of Huawei CFO Meng Wanzhou in 2018 as well as a US trade ban are the latest examples that demonstrated the escalated confrontation between the United States and China, especially in the race for 5G. Some observers even predicted that the conflict around Huawei signaled an “iron curtain” falling across the global high-tech domain.1 In this sense, Chinese capital’s integration into global capitalist networks is not as smooth as that of the country’s counterparts in the West. The following sections provide the stories of Huawei’s entry into European and US markets, revealing the twists and turns of Chinese capital’s counterattack against its Western rivals. Some key questions remain to be answered in this chapter: How did Huawei open up mainstream markets dominated by traditional Western ICT giants? Is Huawei’s entry mode different from its practices in the global South? Why did Huawei encounter completely different outcomes in European and US markets? Has the rise of Chinese ICT corporations changed the geopolitical economic dynamics in the global North?

Turning Europe into a “Second Home Market”

As discussed in chapter 2, Huawei’s internationalization started from Russia in the late 1990s, which profited considerably from China-Russia strategic diplomatic relationships. By taking a firm foothold in the Russian market, Huawei planned to enter advanced Western European countries through peripheral markets. Huawei’s strategic interests in the European market were based on several considerations. First, driven by ongoing technological upgrades and supply demands, the European ICT

market has undergone qualitative growth for decades, constituting one of the most important growth engines in the global ICT industry. Western Europe had the most sophisticated ICT infrastructure and networks in the world, spearheading the development of the global ICT industry for a long time. The region not only took a lead in 2G mobile communications technologies with a decade of domination by its GSM standard, but it also stayed far ahead of the United States in 3G services. In the field of internet services, broadband development has also become a priority of the Europe 2020 strategy. Despite a decade’s stagnation, Europe still managed to sustain most advanced research and development in the ICT sector. The strategic significance of the European market for Huawei lay not only in the company’s profitable market potential but also in its sophisticated R&D capacities and resources. Second, Huawei’s decision to enter into the European market was symbolic, signifying the

company’s leap from a Chinese low-end, low-quality telecom equipment provider to a transnational firm with a place in global high-end mainstream markets. But on the other hand, Europe is also the home turf of several incumbent telecom manufacturing giants,

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including Ericsson, Alcatel, Nokia, and Siemens. They have taken competitive advantages in key areas. For example, Alcatel is strong in the fixed network business, Ericsson has outstanding performance in the mobile sector, and Siemens is solid in the optical networking sector. The predomination of these telecom giants set a high entry barrier and posed numerous challenges to outside players, constituting an enclosure in high-end markets.

ENTRY MODE

The process of Huawei’s expansion in the European market has unfolded with the recession and restructuring of the European economy since the 2000s, a backdrop that granted Huawei unprecedented opportunities to step into mainstream markets at an especially propitious moment. Toward the end of the twentieth century, some key European telecom operators started to invest heavily in advanced wireless technology, but the burst of the internet bubble in 2001 led to large-scale recession across Europe. From 2001 to 2004, the European telecom industry was trapped in a severe debt crisis. By the end of 2002, the asset liability of key European telecom operators in Germany, Britain, France, the Netherlands, and elsewhere had climbed from 120 to 210 percent, while aggregate liability had amounted to €251 billion.2 Incumbent operators beset by the debt crisis were compelled to cut costs on equipment procurement, while Huawei’s low-cost yet high-quality products and services were able to meet such demand during the crisis. Although the structural crisis provided Huawei with an opportunity of entry, the path

toward acceptance and recognition in developed markets was difficult. Therefore, the company’s entry mode in Europe was different from its practices in developing countries where state-backed financing and diplomatic activities played important roles. In Western markets, however, Huawei’s state-supported background generated persistent criticism because of the company’s alleged relationship with the Chinese government. In the initial stage, Huawei actively looked for local vendors to form joint venture

companies and establish cooperative relations to break into local markets. To obtain opportunities of cooperation, Huawei intended to serve as an original equipment manufacturer, trade agent, and low-end supplier for European firms that were already entrenched in the upscale market. Among these incumbent European vendors, only Siemens, which had a well-established relationship with the Chinese government, was willing to cooperate with Huawei (author interview). In 2003 Huawei and Siemens signed a cooperative contract under which Huawei franchised Siemens as the sole agent to sell Huawei’s Quidway routers and switches in global markets. In return, Siemens would assist Huawei in selling the latter’s data communication products, such as routers and other telecom equipment, in the European market through Siemens’ sales networks. To increase the company’s presence in high-end markets, Huawei participated in several eye-catching telecom exhibitions to display the company’s innovative products and solutions, which to a large extent changed the “low-quality” image of a Chinese brand and raised the attention of mainstream operators.3 The company also invested intensely in its PR activities to lobby local customers for creating brand recognition. Huawei’s encroachment into the European market was incremental, especially when facing

the full force of competition from its European rivals. Starting in the role of low-end original Wen, Yun. The Huawei Model : The Rise of China's Technology Giant, University of Illinois Press, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/washington/detail.action?docID=6404643. Created from washington on 2020-12-15 15:26:53.

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equipment manufacturer and supplier, the company eventually achieved a breakthrough in 2004. In April of that year, Sweden-based Banverket Telenät selected Huawei among fourteen bidders to deploy Ethernet and broadband services for its rail sector across Sweden, where Ericsson, one of the largest telecom equipment vendors, is headquartered. Though it was only a small-scale contract in a marginal field, it was the first time a Chinese telecom equipment manufacturer managed to break into the Nordic telecom market. In December 2004, Huawei acquired a WCDMA (wideband code division multiple access) 3G contract from the Dutch mobile operator Telfort to build a nationwide 3G network that can be managed to migrate with its existing network, built by Ericsson. This deal marked a substantial milestone in Huawei’s expansion in developed countries, indicating a Chinese company’s breakthrough in the mainstream market where the dominant 3G standard originated.

IN-DEPTH ENGAGEMENT IN THE UPGRADE OF EUROPEAN TELECOM NETWORKS

When Huawei achieved its initial breakthrough in Europe, the company encountered a setback in the United States at the same time. In 2003 Huawei was blocked out of the US market because the company was sued by Cisco for the violation of intellectual property. This setback became a watershed for Huawei’s strategy of outward expansion. Since then Huawei has shifted its strategic focus of internationalization from the United States to the European market, launching a turf war against global giants in this region. In 2004 the company set up a European headquarters in the UK, which later became its largest overseas branch. At such a turning point, the European telecom market has also experienced a new wave of

industrial restructuring, which posed challenges to and opportunities for Huawei’s development in this region. Since 2005 the European telecom market has gradually recovered from the internet bubble, but key operators still faced considerable strain from the profit- making imperative. From 2007 to 2009, most large network operators witnessed negative growth, while their costs of marketing, management, and administration continued to grow at a rapid rate.4 Moreover, with the saturation of the fixed-line market, most countries planned to escalate the network services upgrades, migrating fixed-line networks to wireless networks. Key operators’ initiatives with technological upgrades gained staunch support from the

EU. The EU blueprint Europe 2020, launched in 2010, further called for investment in the construction of the “Future Internet” as a priority of European long-term ICT development. For example, the UK telecommunications company BT Group, one of the largest telecom operators in the world, launched the nationwide 21st Century Network (21CN) program to begin the process of network convergence. It intended to transfer BT’s fixed-line telephone networks to an Internet Protocol (IP) system, combining data, voice, video, and web services over one converged network. More important, this scheme of network convergence enabled telecom operators to provide more integrated solutions for interconnected multisite operations of transnational corporations. As Dan Schiller observed, “By integrating forward into internet service and backward into backbone networks … the largest network operators staved off threats to their core business of connectivity and elbowed their way toward the

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center of the new network architecture.”5 However, the conflict between declining profits and the imperative of network expansion has become a primary obstacle to further industrial restructuring. One of the biggest challenges of Europe’s broadband development lay in the large-scale replacement of outdated network infrastructure with innovative broadband applications. Under the plan of Next Generation Networks (NGN), traditional circuit- switched telecommunications networks and services had to be gradually upgraded to IP- enabled networks. To accommodate the ongoing reconfiguration of networking technology and the pressure of heavy investment, the demand for flexible technological upgrades and cost reduction became a priority for European mainstream operators to achieve migration plans. In order to respond to this market demand, Huawei developed a set of “brand-new overall

fixed network solutions” based on its progressive fixed network experience to construct new converged networks. In 2005 Huawei launched a “New Fixed Network” campaign in thirteen European countries to promote its innovative solutions for the NGN project. In the same year, BT selected Huawei as one of the eight preferred telecom equipment vendors to provide access and optical transport equipment for the 21CN rollout project, worth $19 billion. This deal was groundbreaking for Huawei’s expansionary strategy in Europe. In 2008 Huawei topped the global broadband equipment IP DSLAM (digital subscriber line access multiplexer) market with a 32.9 percent global market share, while the European market contributed to one of the largest proportions of Huawei’s market share.6 Huawei has now become the key supplier of the NGN backbone projects for operators around Europe.

GRASP THE “TIER-ONE” OPERATORS

In the mobile network field, because China’s 3G licenses had not been issued until 2009, Huawei had to explore overseas 3G markets to grasp the fast-growing opportunity ahead of its domestic agenda. Europe, which spearheaded global 3G network development, was perceived as the most attractive market for expansion. The primary goal of Huawei’s business strategy in the European 3G market was to acquire contracts from the European tier- one operators, with an attempt to get access to these operators’ controlled markets and to further achieve global reach in other areas. With the trend of business consolidation, a few pan-European operators, such as Vodafone,

Orange, Telefonica, and T-Mobile, dominated over 90 percent of European markets. By appropriating Mao’s revolutionary tactic, Ren Zhengfei suggested that Huawei should grasp “the principal contradiction and the principal aspect of a contradiction” in its internationalization by targeting these tier-one operators.7 To obtain the entry opportunity, Huawei chose to adopt the role of low-value-added equipment supplier for these giant operators at the beginning. In November 2005, Huawei signed a strategic partnership agreement with Vodafone, marking a milestone of Huawei’s advance in the tier-one markets. As one of the world’s largest mobile operators, Vodafone has established a series of criteria for selecting its core suppliers. After two years’ strict assessment of Huawei’s capability in terms of manufacturing, R&D, marketing, management, finance, and information security, Vodafone eventually chose Huawei as one of the preferred global suppliers of its short list, on which only Ericsson, Nokia, Siemens, and Lucent were included. However, Vodafone’s

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endorsement did not necessarily lead to Huawei’s establishment in the core 3G equipment market. The role Huawei served as an OEM actually constrained the company’s autonomy in developing its own business capacities and entrenched the company in the low-end supply chain. In February 2006, Huawei obtained a strategic 3G handset contract from Vodafone. Under the agreement, Huawei served as an original design manufacturer (ODM) to provide Vodafone-branded consumer 3G handsets across twenty-one countries. This contract can be seen as a purchasing strategy by Vodafone that used Huawei’s presence to put pressure on other European suppliers to meet Huawei’s low prices.8 The ODM model not only enabled Vodafone to avoid “co-branded” fees paid to European vendors but also strengthened its control over the whole telecom market chain from backbone infrastructure to device provisions. For Huawei, it was the first time the company’s consumer devices entered the European market. However, this entry mode has come at the expense of Huawei’s own brand in the market, and the company’s profit-making space has also been tremendously squeezed by local carriers. Huawei’s strategic advance in the European 3G market was further made in those

peripheral countries controlled by the tier-one operators, which allowed the company to climb up the supply chain from a low-end handset supplier to a key equipment and solution provider in core business areas. As these operators set high barriers to non-European firms in core countries, Huawei had to detour its expansionary trajectory by “circling core countries from peripheral ones.” Due to the uneven growth within European fragmented markets, 3G services in peripheral countries were at a relatively low technological level and a small business scale. Such discrepancies generated opportunities for Huawei to break into the European 3G equipment market. In 2006 Huawei passed Vodafone’s testing on its 3G network equipment and gained Vodafone Spain’s contract to deploy the High Speed Packet Access networks. In the next year, Huawei was awarded the contract to build 70 percent of Vodafone Spain’s 3G network. Under Huawei’s deployment, the performance of Vodafone Spain’s mobile network was enhanced by 30 percent.9 Following the large-scale network expansion in Spain, Huawei was awarded the contracts by Vodafone to deploy other subnetworks in Greece, Romania, Iceland, and Hungary. Huawei’s success in these marginal markets paved the way for its expansion into core countries. In 2007 Huawei won the bid from telecommunications company O2 Germany to upgrade the previous supplier’s equipment by using Huawei’s innovative 2G/3G dual-mode base stations, which were capable of meeting the need for coexistence of 2G/3G networks. This deal was significant for Huawei, because by then the company had successfully established partnerships with all of the European tier-one operators. Huawei’s rapid growth in market share was a clear indication of its strong presence in

Europe. Even during the economic recession, Huawei still managed to speed up its penetration into European markets and sustained strong growth. In 2008 Huawei’s sales in Europe increased by 42 percent. In the same year, the company acquired $3 billion worth of contract sales in this region, accounting for 10 percent of European contract sales.10 In the post–2008 crisis era, major European operators have substantially increased

spending in network migration from 3G to 4G in order to create new demand in previously mature and saturated markets. Huawei launched an aggressive 4G rollout plan across Europe

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to catch up with this wave of restructuring, which was warmly welcomed by European operators. The company even took a lead in 5G research by developing core technological components of the European 5G infrastructure, becoming one of the key contributors of the EU 5G Infrastructure Public Private Partnership program (5GPPP). Huawei’s entry into this lucrative, cutting-edge market has intensified the fray with other European rivals and led to the fast-eroding dominance of these European companies in the telecom equipment market.

R&D INVESTMENT AND ASSET-SEEKING ACTIVITIES

The process of corporate transnationalization often went through different phases, including exporting products; establishing overseas manufacturing for local markets; and linking sales, manufacturing, sourcing, and R&D processes in an integrated circuit of global production and capital accumulation.11 Huawei’s international expansion has primarily followed such patterns and trajectories. As Huawei has evolved from a junior manufacturing partner to a key ICT equipment provider, the company’s presence in Europe has no longer been confined to the provision of low-cost equipment products but has extended to various value-added business initiatives, such as the acquisition of R&D capability and strategic assets. Since its entry into Europe in 2000, Huawei has been seeking to establish large R&D

networks on the continent, fully taking advantage of the EU resources in science and technology development. Since 2007 Huawei has considerably increased its investment in European R&D operations, with a 24 percent annual growth rate. In 2012 the company’s European subsidiaries invested more than €3.6 billion on R&D and more than €14.5 billion in total over the past decade.12 In 2015 Huawei announced the launch of the European Research Institute in Belgium, running eighteen R&D branches in Germany, Sweden, Italy, France, Belgium, the UK, Ireland, and Finland.13 These research institutes took advantage of local R&D capabilities and performed basic and applied research in different specialized fields. Huawei’s Europe-based R&D facilities have become a backbone of the company’s global technological research networks and a test field for its most advanced ICT technologies. In addition, Huawei set up eighteen collaborative innovation centers with local mainstream operators across the EU, cooperating with partners in some national or EU- backed research projects. Huawei’s increasing investment in European R&D facilities indicates that the company has gradually fit into the local innovation system and acted as a knowledge contributor, establishing itself as a key player within the “bedrock of the science and technology landscape in Europe.”14 At the same time, Huawei’s foreign direct investment in Europe underwent a dramatic

increase. Especially after the European debt crisis, Chinese investors seized opportunities to buy into cash-strapped European industrials and assets. The increasing flow of Chinese investment into the ICT sector coincided with the EU’s endeavor to rebuild its high-tech industry. In the framework of the Digital Agenda for Europe, for instance, ICT was given unprecedented priorities.15 As part of this agenda, the Connecting Europe Facility project, which was designed to contribute to the competitiveness of the European economy and interconnection of pan-European networks, set aside €9.2 billion to support the investment of ICT development in the EU. Huawei’s huge direct investment has been channeled into such endeavors to support the priorities of the ICT-led restructuring. Huawei scrambled to

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leverage its roles in Europe’s ICT development and constituted itself as “a legitimate contributor to the policy-making process.”16 The escalation of the company’s investment scale and scope, on the other hand, fully exemplified the heightened degree of Huawei’s transnationalization and the deep integration of Chinese capital in the regional and global economic systems. Given the increasingly important role Chinese ICT firms have played in the restructuring

of the European economy in the post-crisis era, Europe provided a much friendlier place than in the past for Chinese transnational corporations to expand and penetrate. Chinese telecom equipment firms have reportedly spent more than three times as much in Europe as in the United States.17 In 2012 Huawei announced a further investment of $2 billion and promised to double its current workforce to fourteen thousand employees in Europe. Huawei has become the second-biggest Chinese investor in Europe, just behind global automotive group Zhejiang Geely (which owned the Swedish carmaker Volvo), and is the biggest employer among all Chinese TNCs operating in the region.18 As a Huawei executive claimed, Huawei intends to turn Europe into the company’s “second home market” and a stable engine of profit growth.19

CHALLENGES AND TENSIONS

In spite of the significant success Huawei has achieved on the continent, the company’s expansion has also encountered immense challenges and tensions. One big challenge was the prevailing concern about the company’s Chinese identity and its relationship with the Chinese government and the military. To consolidate the company’s position in the global North, Huawei attempted to blur its Chinese identity in its discourse and conformed to more universal market norms advocated by Western countries. Ren Zhengfei even claimed that Huawei wanted to be viewed as a European company in an effort to receive recognition and trust from the West.20 Along with Huawei’s deeper integration in Western markets, Ren has further suggested that the company must reject “parochial nationalism” for the sake of internationalization. This change of corporate discourse is in striking contrast with Huawei’s expression of nationalism in its early stage of international expansion. It also underscores the company’s intention of acquiring a legitimate status in global markets, while acquiring recognition from the West is seen as the prerequisite to achieve this objective. Although Huawei received a warmer welcome in Europe than in the United States, the

company’s growing presence and rapid expansion has still raised considerable tensions and disputes within the EU. In 2012 the EU trade commission launched an anti-dumping and anti-subsidy investigation into Huawei and ZTE, alleging that the Chinese vendors were being subsidized by the Chinese government through its preferential cheap loans, which enabled the Chinese companies to undercut the European champions’ prices and create a “distorted playing field” for Chinese TNCs in their overseas expansion. The EU trade commission sent a warning letter to Chinese president Xi Jinping, urging the Chinese state and corporations to change their practices. The EU executive further declared that the Chinese vendors had to increase 29 percent of their products’ prices and urged the Chinese government to guarantee 30 percent market shares for European companies in the Chinese market.21 This anti-dumping action against Huawei and ZTE was intended to shield the

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European strategic sector from the rush of Chinese rivals and bring Chinese players in line with international market rules. But Europe-headquartered vendors such as Ericsson, Alcatel- Lucent SA, and Nokia Siemens Networks feared that the EU’s protectionist action would cause the Chinese government’s retaliation on their business in China, which might make them lose more opportunities in China’s lucrative market. Despite the prevailing concern about the expansionary power of Chinese capital, division

emerged among EU member states and different capitalist blocs, reflecting the entangled interests and conflicts among various power blocs, including states, supranational powers, and fractions of transnational capitalists. For example, some states linked Huawei’s business expansion in Europe with security issues. The UK government, nevertheless, had explicitly expressed its support for Huawei’s presence in the country before the US ban, hoping to attract Chinese investment for local economic recovery. The David Cameron administration especially and explicitly claimed that economic growth powered by the development of the technology “should not be subsumed beneath national concerns,”22 a view that starkly contradicted other Western nations’ skepticism. Such a pragmatic stance explained why the deal to establish Huawei Marine, the joint venture partnered by Huawei and UK-based Global Marine Systems, in one of the most sensitive ICT areas was approved by the UK government in 2008. During the UK’s “golden era” with China, the UK had been a major buyer of Huawei’s telecommunications gear and one of the most important business partners in the EU. Huawei alone has also pledged to increase investment to £3 billion in the UK between 2018 and 2022.23 Growing geopolitical rivalry between the United States and China, especially the

controversy over Huawei’s 5G technologies, has complicated Huawei’s engagement in Europe and added uncertainties to Europe’s 5G deployment. In fact, US-led calls for a ban of Huawei 5G technologies received mixed responses in Europe. On the one hand, European countries were eager to integrate 5G to boost their digital economy. According to an estimate from the EU, the introduction of 5G could bring €113 billion in economic growth to the EU’s automotive, health, transport, and energy sectors by 2025, but it would also cost Europe €56.6 billion on 5G network construction.24 As Europe’s 4G already lagged behind its competitors in Asia and the US, the introduction of 5G was perceived as a crucial agenda for European countries to catch up amid increasing global competition for the next generation of telecommunications technologies. In the race to 5G, Huawei is taking a lead in multiple areas, far ahead of its European competitors. In view of the economic stakes, excluding Huawei from key European markets will be likely to deter the progress of the 5G rollout across Europe and substantially increase the cost for European operators to build their 5G networks. But on the other hand, the concern over Huawei’s threats to national security has

overridden economic and technological consideration across some European countries, giving rise to the calls for protecting Europe’s digital sovereignty by reducing Chinese companies’ deep involvement in the buildup of Europe’s ICT infrastructure. In particular, the UK government’s “golden era” policy with China was disrupted amid increasing geopolitical tensions. The UK-based operator BT, one of the first European tier-one operators to establish partnership with Huawei, announced that it would remove Huawei’s technology from its core

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networks under US pressure. Vodafone also followed the US ban, confirming that it would restrain its involvement with Huawei in the UK. ARM, a UK-based chip designer, suspended its business ties with Huawei, leaving Huawei’s semiconductor business in peril. Although the EU’s quest for strategic autonomy by reducing dependence on the United States and advancing independent industrial policies has become a pressing political issue across the continent over the past decade, Europe’s current lack of ability, especially its lack of critical military capabilities, made the reality fall short of its political ambition. On the side of Huawei, Europe still constituted one of the most important international

markets. As of January 2019, Huawei had won thirty 5G contracts in the world, including eighteen in Europe, nine in the Middle East, and three in the Asia-Pacific region.25 The company had 35 percent of the market share in Europe. Some European countries, such as France, Spain, and Italy, as well as smaller network carriers, were still willing to preserve their partnership with Huawei and embrace the company’s advanced 5G technologies. In spite of the rapid integration of Chinese ICT capital in regional restructuring and the

globalized capitalist system, territorial logic still plays an important role in both restraining the expansionary nature of globalized capital and reshaping the modes of capital accumulation. The following section describes Huawei’s expansion in the United States and exemplifies how the interplay of geopolitical pressures and inter-capitalist rivalry has influenced uneven capitalist development and the struggle of neoliberal capitalist blocs.

Insurmountable Obstacles in the United States

The United States enjoys the world’s largest ICT market, containing a massive ICT investment and user base. Its ICT funding has far exceeded that of China, Japan, the UK, and Russia combined.26 The large market size became a compelling motive for Chinese firms’ expansion into the United States. On the other hand, US-based TNC giants have preemptively occupied leading positions and established long-standing strength across numerous transnational markets, such as corporate data communication, semiconductor, mobile equipment, software, and cloud computing, which has posed a barrier to foreign rivals’ entry into their home markets. Moreover, the US state-corporate alliance also scrambles to suppress any “hostile,” non-US-based capital by wielding the powerful state apparatus, which can be viewed as part of the US effort to maintain its leadership in the global capitalist system. US confrontation over Huawei through a series of arbitrary actions signals the US move to contain China’s business and technological power. Huawei’s encountering of setbacks in the United States sheds light on such tensions between the US hegemonic power and the corporate power of newly emerging markets.

AGGRESSIVE ENTRY MODE: INTER-CAPITALIST COMPETITION AND ALLIANCE

Huawei’s engagement in the United States can be traced back to the early 1990s. As early as 1993, Huawei established a subsidiary called “Ranboss” in the United States. This subsidiary, which was later renamed “FutureWay,” has been developed into one of Huawei’s most important R&D centers in its overseas markets. Before Huawei started its large-scale internationalization, this subsidiary primarily served to procure advanced ICT products in the

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US market. During the Clinton administration, Huawei reportedly spent $685,700 to purchase high-performance computers from Digital Equipment Corporation; $300,000 from IBM; $71,000 from Hewlett-Packard; and $38,200 from Sun Microsystems.27 In addition, Huawei also bought $500,000 worth of telecom equipment from its major rival, Qualcomm.28 In 2001 Huawei established its North American headquarters in Plano, Texas, indicating the company’s strategic move to explore the world’s most advanced ICT market. Although had Huawei marked its footprints in emerging markets and in Europe since the

early 2000s, the United States remained the last untapped market for the company. As the US government set insurmountable barriers to foreign vendors in the domestic network infrastructure market, Huawei instead chose the burgeoning field—the enterprise business, such as corporate routers, switches, internet access points, and corporate networks—as a beachhead into the US market. This meant Huawei had to launch head-to-head competition with Cisco—the world’s largest supplier of business network equipment—in its home market. Before Huawei entered the United States, the two companies had already competed in China’s booming market. In spite of its role as a market latecomer, by 2002 Huawei had already taken up a 25.4 percent market share of China’s router markets, next to Cisco’s 51.8 percent. In China’s low-end market, Huawei’s market share reached 35.1 percent, narrowing its gap with Cisco’s 46.4 percent.29 To some extent, Huawei has posed a direct threat to Cisco. After gaining a firm foothold in China’s market, Huawei was ambitious to expand its

enterprise business in the United States. It adopted a low pricing strategy again, offering prices 30 percent lower than those of Cisco and other Western rivals. In addition, in the early 2000s the company launched an aggressive advertising campaign across the United States to build its corporate image. One advertisement features Huawei products against the background of the Golden Gate Bridge in San Francisco, a reference to the Cisco system. The text reads, “The only difference between us and them is price,” an underlying meaning that indicates the company’s competitive advantage in its cost-effective products and solutions. However, Huawei’s aggressive market strategy raised persistent counteraction from the rival. Cisco’s first reaction was to negotiate with Huawei by promising to provide Huawei with OEM subcontracts for its low-end product manufacturing, but the condition was to force Huawei to give up its high-end products under its brand and withdraw from the US market.30 Huawei refused this request. To expel the Chinese competitor from its home market, Cisco launched another war

against Huawei in 2003 by suing the company for infringement of intellectual property. Cisco claimed that Huawei infringed on its patents and stole its source code in Huawei-produced routers and other networking equipment. The company also lobbied the US government to enact more intrusive policies over property protection to guarantee and privilege US-based companies’ interests. In reaction to Cisco’s unresolved lawsuit, Huawei chose to cooperate with another American enterprise network supplier, 3Com, to establish a joint venture. The alliance helped Huawei reshape its market strategy in North America and allowed both vendors to compete effectively with their common rival—Cisco. Despite the different origins of these two firms, their shared interest in capital accumulation served to bond diverse

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national blocs of capital together and to contest with other factions of capital in the market. In this case, the involvement of 3Com in the disputes actually helped Huawei increase its bargaining power in settling the lawsuit.31 In July 2003 Cisco and Huawei finally reached an agreement. Cisco agreed to drop the lawsuit, but Huawei was forced to remove almost all of its router products from the US market. The conflicts with Cisco frustrated Huawei’s expansionary initiatives in the United States.

As a result, Huawei had to change its aggressive entry mode in the States, turning to other US companies for cooperation. This strategy compelled Huawei to give up its own brand in North America and adopt the forms of OEM and joint venture to reroute the path toward the enclosed market. In 2006 Huawei collaborated with Motorola on 3G technologies, undertaking manufacturing subcontracts for Motorola’s 3G wireless equipment. But such an alliance was shallow and unstable when conflicts occurred among different factions of capitalists. In 2010 Huawei and Nokia-Siemens competed to acquire Motorola’s telecom network equipment business, but the European giant eventually won the deal for $1.2 billion. This acquisition directly led to the termination of Motorola’s collaboration with Huawei. After the announcement of this acquisition, Motorola immediately launched a lawsuit against Huawei for alleged theft of trade secrets, with an attempt to attack one of the biggest potential rivals in North America for its new partners.

OBSTACLES ERECTED BY THE US STATE APPARATUS

In addition to inter-capitalist competition, Huawei also faced formidable obstacles erected by interlocked US state apparatuses that tended to articulate the presence of Chinese capital with the threat of national security. In line with the government’s policy, US mainstream media took advantage of their discursive power to distort Huawei’s corporate image, linking the expansion of Chinese ICT capital with the discourse of the “China threat,” especially accusing Huawei of its links to China’s military. This prevailing rhetoric, which is also representative among US military elites and its ruling class, reflected US fears about the ICT- enabled modernization of China’s military forces. The ruling class was also concerned that the increasing involvement of Chinese capital in the lucrative military industry would substantially threaten their immense business profits and margins in the market. In addition, Huawei was under fire from US media for its engagement in some “hostile” countries. In October 2011, the Wall Street Journal made a charge against Huawei’s business operations in Iran, claiming that Huawei aided Iran’s government in nationwide surveillance and censorship.32 Under immense public pressure from the United States, two months later Huawei announced that it would scale back its business in Iran, promising not to seek new customer contracts but to limit commercial activities with existing customers. This accusation seems to have set the scene for the controversial arrest of Huawei’s Meng Wanzhou in 2018. Along with the pullback from Iran, Huawei’s operations in Cuba, Syria, Libya, and other “politically sensitive countries” have also been disrupted. According to an employee who had worked in Skycom Tech, Huawei’s Hong Kong–based subsidiary company accused of breaching US sanctions on Iran, Huawei’s operations in these “hostile” countries had to be carried out in a covert manner in order to avoid unreasonable accusation from the West, especially from the United States (author interview).

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As Ren complained, “For years some of the Americans and media have persistently distorted facts and attacked us.”33 The media rhetoric that resonates the discourse of US extraterritorial network policy primarily serves to consolidate US political control and economic strategic interests when facing the threat of foreign capital. As a significant constituent of American hegemony, US mainstream media’s discursive power not only plays a crucial role in defining “rules of law” but also creates “a world after its own image” to sustain its supremacy in the global political economic order.34 It should be noted that the difficulties Huawei faced were more than media distortions and

pure competition with its peer rivals. Under the US government’s direct intervention, Huawei underwent a series of setbacks in the American market. In 2008 the company was forced to drop a bid for purchasing a controlling stake in 3Com. The US government claimed that this deal would give China access to the anti-hacking technology used by the US Defense Department. Eventually the American firm Hewlett-Packard won the bid for acquisition of 3Com, while Huawei lost its most important partner in the US market. Likewise, in 2011 Huawei’s purchase of the assets of American server company 3Leaf was also blocked. The Committee on Foreign Investment in the United States (CFIUS) declined the transaction due to “concerns of national security.” In the telecom infrastructure segment, Huawei remained confined to the periphery of telecom businesses. For decades the company has been completely excluded from purchase lists of US top-tier carriers, including AT&T, Sprint, T- Mobile, and Verizon. In 2010 Huawei was close to winning the bid from Sprint Nextel, America’s third-largest mobile operator. Huawei’s solutions for Sprint’s wireless network upgrade projects could have helped the carrier save more than $800 million in costs. But according to a Huawei employee who worked at the company’s North American branch, the deal suddenly came to a deadlock because of the US government’s intervention (author interview). And the operator eventually opted for another homegrown vendor. In response to the American government’s unfair treatment, in 2011 Huawei’s deputy

chairman, Hu Houkun, released a lengthy open letter to rebut the groundless allegations against Huawei, calling for a formal investigation of Huawei’s operations in order to dispel the concerns about Huawei’s threat to US national security. As a direct result of this open letter, the US House Intelligence Committee launched a yearlong investigation of Huawei and ZTE. However, contrary to Huawei’s expectation, the investigative report not only concurred with the allegations against Huawei in terms of its potential threat but also further urged the US government system and private-sector entities to shun these two Chinese companies from the US market.35 In fact, US discourse on national security was grounded in several concerns. First of all, it

underlay the domestic realist concern that considered telecommunications architecture and cyberspace as new frontiers of interstate wars and as “nationally bounded territory in need of defense.”36 US military elites had specific concern about foreign suppliers’ unauthorized access to US public and private network systems.37 This has become the key excuse for the US government to block foreign ICT capital from the supply chain of domestic critical infrastructure. The setbacks Huawei has been encountering in the American high-tech market can be seen as a result of US defensive operations in managing potential threats of network

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security. Nevertheless, US network policy initiatives in the most recent decade have not only

focused purely on defensive strategies but also tended to foster more offensive actions to maintain US dominance in the high-tech areas. One of these crucial measures was to ramp up the range and depth of surveillance via big-data processing capabilities. Moreover, US unilateral dominance in the extraterritorial cyberspace hardens US offensive efforts to build a global invasive network of surveillance. Its operations of unscrupulous surveillance have gone far beyond the rationale of “antiterrorism,” penetrating deeply into other countries’ critical infrastructure networks as well as foreign firms’ corporate networks through state- firm partnerships. The US authorities and media have charged that Huawei-made telecom equipment was devised to allow unauthorized access by the Chinese government and the military. Ironically, it is the US National Security Agency (NSA) that has reportedly launched major cyberattacks against Huawei since 2009. In early 2009 the US spying program hacked into servers of Huawei’s central office in Shenzhen, which allowed the NSA to gain access to Huawei’s email archives and information about the company’s major customers. The NSA also obtained the individual source code of Huawei-made products, allowing US officials easy access to any network using Huawei’s equipment. A classified NSA document leaked by Edward Snowden further revealed the reason behind the US agency’s cyberattack: “Many of our targets communicate over Huawei-produced products. … We want to make sure that we know how to exploit these products—we also want to ensure that we retain access to these communication lines, etc.”38 As Huawei Rotating Chairman Guo Ping stated in the Financial Times, “[Huawei] hampers US efforts to spy on whomever it wants.”39 The full-scale assault on Huawei reflects the United States’ fear of losing control over its global surveillance networks, especially when Huawei’s gears are gaining wider adoption on the global scale. It also reveals the US double standards in defining “national security.” Furthermore, with the growing geopolitical tensions, the Trump administration has

intensified the fight against Chinese high-tech companies. In August 2017 the US government formally initiated an investigation into China’s practices related to technology transfer, intellectual property, and innovation under Section 301 of the Trade Act of 1974. In March 2018 the Office of the United States Trade Representative published a report of its findings, declaring that China’s industrial upgrade plan “Made in China 2025” (MIC2025) would pose a threat to the US economy and technology. Following the Section 301 report, President Trump signed a memorandum on March 22 to impose tariffs on Chinese imports, primarily targeting China’s strategic areas in MIC2025. In fact, before the full-scale trade war launched by the Trump administration, the US

government had already taken heightened control of Chinese investment in the high-tech industry. Three months earlier, in January 2018, the US government blocked the $1.2 billion acquisition plan of Ant Financial—a Chinese electronic payments company affiliated with Alibaba—to buy the American money transfer company MoneyGram. Upon the failure of this acquisition, President Trump issued an executive order in March, blocking the Singapore-based microchip maker Broadcom proposal of a $117 billion buyout of Qualcomm on grounds of national security. The US officials warned that the proposed takeover would weaken Qualcomm and give Chinese rivals like Huawei an advantage.40 If these incidents

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offered early signs of a US move to contain China’s ICT companies, the US government’s ban on ZTE in April shows how the United States stepped up its drive to confront China. Although the US government later lifted the ban, the action was followed by the trade war and blatant attacks on Huawei. In May 2019, when the tit-for-tat trade war between China and the United States was escalating, Trump signed an executive order declaring a national emergency, barring US companies from using telecommunications equipment made by manufacturers deemed a national security risk. Following the order, the US Commerce Department announced it would add Huawei to its export blacklist, the Entity List, aiming to smash the Chinese ICT giant’s global supply chains. After the blacklisting, a few high-tech companies, such as Google, suspended their business with Huawei, which involves the transfer of hardware, software, and technical services. Behind such arbitrary actions was the US attempt to wage an economic war to crack down

on China’s rise and assert US dominance in the global political-economic order. Following US operations, some US allies, such as Australia, also invoked protectionist policy excluding Huawei from their network construction plans due to “security concerns.” Australia has repeatedly banned Huawei from taking part in its national infrastructure projects, such as the National Broadband Network projects. An undersea cable project deployed by Huawei Marine that would connect the internet between Solomon Islands and Australia was also blocked by the Australian security agency. The officials of the Five Eyes, the Western intelligence alliance including the member nations of the United States, the UK, Australia, New Zealand, and Canada, reportedly met several months before the Huawei arrest and reached an agreement to counter Huawei’s global reach.41 The unprecedented arrest of Meng was symbolic to reveal the United States’ extraterritorial power to exercise universal jurisdiction beyond its territory. As Schiller argues, the United States has the ability to project power into the domestic space of other countries and to affect their decision-making process.42 As a rule maker, the United States applied its power at the national and international levels to pursue its double standards: to promote liberalized expansion for its home-based capital abroad and to launch protectionism to exclude rivalries at home.43 Therefore, the simple-minded rhetoric of “national security” is limited to capturing inter-state conflicts and new forms of imperialism in the network age. In digital capitalism, critical ICT infrastructure has become one of the fundamental elements of network sovereignty. The US effort to sustain its leadership in digital capitalism is illustrated in its coercive actions against rival capitals and states, which can be viewed as an extension of the US imperialist power in the network age. As a Huawei executive commented, Huawei has become a “negotiating pawn” between the United States and China. The US government’s ban on Chinese ICT capital under the logic of “national security” is nothing more than a means to restrain the rise of China’s “national comprehensive strength.”44 Apart from the realistic concern related to nation-state interests, the discourse of “national

security” also intertwines with a tension of inter-capitalist rivalry. In the 4G era, American companies such as Apple and Qualcomm have become the biggest winners, playing critical roles in revolutionizing the ecosystem of wireless industries. Apple, for instance, established a vertically integrated value chain ranging from proprietary equipment to software systems

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and from services to distribution channels.45 The significant economic edge these companies enjoyed enabled the United States to surpass Europe in becoming a dominant leader in the transition from 3G to 4G. But Chinese companies with core technologies and strong innovation capabilities, such as Huawei and ZTE, have posed real threats to US companies, especially in the backdrop of the global race to 5G technologies. In fact, the focus of 5G mobile communications is more than the evolution of technologies enabling accelerated telecommunications connection; the focus is also on the massive transformations of business and technological ecosystems that revolutionize geoeconomics of the ICT development. Apart from advancements in network equipment and hardware devices, the changes of 5G ecosystems redefine network connectivity by supporting some strategic industries and applications such as self-driving cars, virtual reality, and the Internet of Things. The 5G revolution will also bring promising revenue streams to ICT companies. Yet the rise of China in 5G, which is mainly led by Huawei’s technological innovations in hardware, has undercut US companies’ monopoly profit in the redistribution of the profit chain. In this sense, the US attack on Huawei was more provocative to protect American companies’ interests and the home-based industrial ecosystem in strategic areas. However, for those Chinese manufacturing companies entrenched in the low-end value

chain, the US government was more positive about and tolerant toward their entry. For example, Chinese PC producer Lenovo encountered fewer obstacles and oppositions than Huawei when acquiring American companies’ assets such as IBM’s PC business unit and Motorola’s handset division. This is largely because the ICT manufacturing business in the United States has been facing shrinking margins in the last decade, and many American high- tech companies were eager to seek a restructuring strategy by getting rid of low-value-added business and shifting to high-end internet-based applications. Chinese companies’ acquisition of American companies’ outdated business was actually congruent with the benefit of the US industrial restructuring.

LOCALIZATION AND BUSINESS STRATEGIC ADJUSTMENT

In response to coercive actions from the US government-corporation power complex, Huawei had sought changes in terms of the corporate structure and market strategies to conform to US policy requirements and economic interests. After the US Congress published the investigative report against Huawei, the company released a Cyber Security White Paper in September 2012 to respond to the US government’s accusation, promising to improve the company’s cybersecurity operations and calling for consensus of international standards based on a broader, collaborative, and rationally informed dialogue.46 This report clarified Huawei’s connection with the Chinese government and military and implicitly challenged US-dominated standards on cybersecurity. To concretize the company’s effort on the protection of cybersecurity, Huawei also promised to publish original codes of all of its equipment to the US government. In addition, Huawei sought to localize the American branch’s operations to act like an “American company” and to engage closely with US political institutions and partner companies, in an attempt to gain recognition from the public and private sectors. In 2012 Huawei announced that it awarded three-year procurement contracts worth $6 billion to three US semiconductor companies—Qualcomm, Broadcom,

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and Avago—promising to create tens of thousands of job opportunities for the American ICT industry. A Huawei employee working at the North American branch revealed in an interview that since 2012 the company has called back a large number of Chinese employees from the US-based branches and substantially extended the number of local employees to fulfill its commitment to the creation of local employment opportunities (author interview). After the Meng arrest, Huawei sought an interim agreement with Qualcomm to pay the latter $150 million royalties each quarter. Meanwhile, Huawei tended to recruit more American executives who had former working experience in other Western TNCs or US government institutions in order to transnationalize its managerial strata. In addition, the company hired an army of outside and in-house lobbyists, including key former politicians in the US government, and expanded its large spending on lobbying in Washington, DC. However, Huawei’s transnationalized effort in the United States appeared futile. The

company’s sales in the segment of the infrastructure business and enterprise networks business sharply declined in the US market after the 2012 congressional report. Huawei’s revenue in North America accounted for the lowest share of the company’s overall revenue. To eschew the controversy of national security concerns and revive the market strategy in the United States, Huawei entered the consumer business with a focus on lower-margin sales of its branded mobile devices using Google’s Android operating system after 2012, shifting the role from a critical infrastructure equipment supplier to a consumer device maker. In addition, because the software operating system is still mastered by the American company, Huawei’s expansion in the consumer market seems to pose less of a threat to American firms and the country’s network security. Despite dramatic growth of Huawei smartphone sales globally, its market share in the US market was far behind other smartphone giants, such as Apple, Samsung, LG, Motorola, and HTC. Google’s move to restrict Huawei’s access to its service could further bring catastrophic consequences to Huawei’s overseas smartphone markets. In view of the insurmountable obstacles and unfair treatments in the United States, as early

as 2013 Ren Zhengfei announced that “Huawei is exiting the US market.” He explained that “it is not worth it if [Huawei’s involvement] causes problems for US-China diplomatic relations.”47 Since then Huawei has gradually scaled down its US operation. After the ZTE ban in 2018, Huawei reportedly scheduled its own withdrawal from three US offices and closed factories in the United States.48 Although Huawei was banned from US federal agencies and tier-one operators, an

overlooked fact is that Huawei’s cost-effective telecommunications gear was highly sought after among a significant number of rural telecommunications operators. In the US rural telecommunications market, Huawei offered 20 to 30 percent lower prices of high-quality networking gear than its competitors, helping some smaller US telecommunications companies to provide landlines, mobile service, and data coverage to the poorest and most remote areas in the country.49 For some rural telecommunications operators, Huawei was the only telecommunications equipment supplier to support their wireless network. The US federal government’s sanction against Chinese telecom equipment manufacturers would bring a detrimental impact on these operators and their wireless services in rural, underserved areas across the country. According to the Rural Wireless Association (RWA), an American

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trade association representing rural wireless carriers, at least 25 percent of its carrier members would be seriously impacted by the government’s ban on Huawei. It would cost these carriers as much as $1 billion for the replacement of their telecommunications equipment.50 The RWA and some smaller rural carriers have been lobbying the Federal Communications Commission (FCC), urging the American government not to adopt rules that restrict Huawei’s presence. There is no doubt that US protectionist policy, driven by the realistic concerns and big capitalists’ imperatives, was at the sacrifice of local carriers’ interests and the universal public service, which will deepen the divisions within the US market. The Chinese government’s central leadership had made efforts to intervene in and ease the

tensions between Chinese ICT companies and the US government before the US-China trade war. As part of these efforts, in 2015 Chinese president Xi Jinping began his first visit to the United States by organizing a China-US tech summit in Seattle, with the goal of seeking out an ally with US tech giants and quelling or containing the US government’s sanctions on Chinese high-tech firms. Meanwhile, US internet companies such as Facebook, Google, and Twitter have also been clamoring for improving access to China’s huge digital markets. However, the deep-seated divisions over a range of issues—from trade disputes to cyber- commercial espionage—continued to set the scene for US-China confrontation. Moreover, the changes in power politics have complicated the inter-state and inter-capitalist competition between China and the United States. The aggressive policy the Trump administration pursued forced the Chinese government to slip into the “conflict zone mode” amid the US- China trade war tensions. This incident also led to diplomatic disputes between China and Western countries, a tough stance that the Chinese government rarely adopted to intervene in a business foreign affair in order to support its national champion. Within China, the US arrest of Meng and the trade ban provoked a widespread nationalist backlash against US “imperialist” action and nationalist support to Huawei. The irreconcilable conflicts compelled the Chinese government to readjust its geopolitical

strategy. Likewise, Huawei opted for a strategy of “delinkage” with the US market. As Ren Zhengfei claimed in an interview with the BBC, “There’s no way the US can crush us.” He further quoted Mao in Huawei’s strategy: “If the lights go out in the West, the East will still shine. And if the North goes dark, there is still the South. America doesn’t represent the world. America only represents a portion of the world.”51 Under consistent attack from the United States, Huawei decided to turn defense into counterattack by taking legal action against the US government, signaling the company’s more aggressive stance against the United States and its determination in reducing dependence on Western markets. At the same time, Huawei’s “delinking” with the United States might make the company adjust its strategic focus to accommodate China’s thriving market. China’s reorientation toward a “domestic growth-driven model” actually “granted some maneuvering room to Chinese capital.”52 The Chinese state’s capacity in reserving and cultivating its national market might enable Huawei to adjust its trajectory of development from “going out” to “going back” to its rapidly growing home market.

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Conclusion

The outward expansion of Chinese capital from peripheral countries to core countries is consistent with the Chinese state’s initiatives of pushing for deeper integration into global capitalism. The penetration of Chinese ICT capital into traditional core countries is somewhat posited as an essential step to enhance China’s position in the global order. It is important to point out that the process of such a “counter capital flow” is not friction-free. It is rife with inter-state and inter-capitalist tensions. As Robinson emphasizes, the conjunction of geopolitical and structural analyses must be informed in order to understand the growing conflicts between traditional core countries and rising powers in the global South.53 The Huawei case illustrates the intensifying geopolitical-economic struggle over the control of network infrastructure and information sovereignty. Underlying this struggle is a new form of “territorial logic” in the age of digital capitalism—that is, securing the commanding height of information technologies and cyberspace warfare to ward off threats and to ensure greater security. China’s proliferating efforts of nurturing globally competitive ICT firms and pursuing their extraterritorial expansion can be viewed as part of such a logic to secure greater political and economic power in the global capitalist system. Besides the tensions of the territorial logic, the contradictions embedded in Huawei’s

expansion also demonstrated inter-capitalist competition. The conflict between China’s emerging corporate power and the traditional core powers can be seen as a form of competition between capitalists for repositioning in the ranks of the transnational capitalist class. But given intertwined interests of different blocs of the transnational capitalist class in the highly interdependent networks of capital accumulation, the United States’ drastic move to attack Huawei could in turn damage American firms and the US high-tech sector. In light of the multifaceted and complicated nature of Chinese capital, it is still too early to

predict that the rise of Chinese ICT corporate power would pose any real threat to the West. Although Huawei has successfully broken into Western mainstream markets and possessed competitive advantage in global production, the scale and scope of Chinese TNCs in the ICT sector has “remained below par” with giant Western competitors.54 The US attacks have exposed the vulnerability of Chinese ICT companies’ supply chain, which is highly dependent on US core technologies. Although Huawei has achieved leadership in some fundamental hardware technologies, the role of other Chinese companies in the global ICT ecosystem remains less important than their US counterparts. Moreover, despite Huawei’s “delinkage” strategy in the United States, factions of Chinese

capitalist groups, such as the newly emerging internet capitalists, still tend to forge ties with the United States for their expansionary ambitions and converge on a shared agenda of capital accumulation or policy goal. Therefore, it would be a mistake to posit the rise of China’s corporate power as a coherent force in challenging the existing US-led political- economic order. There is no doubt that the US approach that resorted to containment and confrontation will create more uncertainties for Chinese ICT companies’ global expansion in an increasingly hostile international market. More Chinese companies are likely to be caught up in the geopolitical-economic conflicts between China and Western countries in the transition of global power shift.

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