The Economist recommended in an opinion piece in October 2021 that the Chinese tech company Huawei reorganize so that its skilled specialists can transition to the next generation of high-tech businesses. At the time, the reasoning seemed tone.
After a series of knockdown jabs from America’s criminal and regulatory regulators, Huawei’s 5G telecoms infrastructure and device businesses were on their knees. Locked out from European markets, its wares were met with questions from customers elsewhere, too.
If a company that is about to go out of business immediately, why would anyone even consider purchasing a piece of technology that needs after-service?
Remaining with what appeared to be a sinking ship appeared to be the death sentence for some specific Huawei people ‘ recently promising jobs.
In 2024, Huawei has recovered with numerous innovations that have largely shaved off foreign technologies that have been blocked by US-led sanctions and other restrictions.
Consider the list. Huawei unveiled the Mate 60 smartphone in September 2023 using the Kirin 9000S, a chip made by Semiconductor Manufacturing International Corporation ( SMIC ), one of China’s other sanctions-hit companies.
HarmonyOS NEXT, a new smartphone operating system that is entirely independent of Android, was unveiled by the company in January 2024.
The company began building a new R&, D center in April to develop chipmaking tools in an effort to overtake and advance the technological frontier that is almost exclusively controlled by Dutch high-end chip machine maker ASML.  ,
Huawei’s recent successes have also defied financial expectations. After hitting peak revenues of 891 billion yuan ( US$ 123 billion ) in 2020, sanctions caused them to slide 636 billion yuan ($ 87.5 billion ) the year after, with no realistic pathway to recover the lost revenue in Western markets.
Why, then, did the business remain committed to increasing its R&, D spending despite such turbulent business cycles and seemingly unattainable opportunities to match the largest US tech companies with revenues and market values several times the size of Huawei?
A closer examination reveals that Huawei’s confidence came not only from its business or technological prowess but also from the loyalty it has in its local Chinese markets.
Huawei was a known target for assassination in America’s politicized tech war, but the Chinese government continued to support the business for something else that was promising but less targeted.
Last year, the government supplied Huawei with some$ 30 billion in subsidies and support.
Thus, it’s employees did n’t fend off in droves to search for greener, or at least less blacklisted, pastures. Rather than shrinking, the firm’s employee count surpassed 200, 000 in 2023, with 55 % working in R&, D.  ,
And most importantly, Chinese consumers continue to purchase Huawei products despite US sanctions. Tellingly, the Mate 60 grown-chip-pura-70-smartphone-mate-60-pro-us-chip-controls-apple/”>outsold Apple’s iPhone, allowing Huawei’s smartphone sales to grow 37 % while Apple declined by double digits.
To be sure, the Chinese government’s retaliatory measures have contributed to the shift. According to Bloomberg, Chinese state agencies and government-backed companies across the country issued an order last year to their employees to stop bringing iPhones and other foreign devices to the office.
Despite the consensus in the industry that the Kirin 9000S is technically inferior to Huawei’s pre-approved chips made abroad, and that Chinese consumers are increasingly purchasing the Mate Pro, the most cutting-edge ones used in iPhones.
The cold logic of commercial success and technological advancement is arguably being stifled by a nebulous emotion as sanctions continue to fly in the ever-evolving Sino-American tech war.
Beyond Huawei, Chinese consumer behavior is assisting many Chinese companies to overcome international competition and regulatory issues, whether it be for their own good or for their own sake.
As more Chinese-made goods, from panels/#:~:text=The EU is imposing a,80% of the EU market.”>solar panels to vehicles“>electric vehicles, enter the American and European markets without imposing tariffs or other tariffs, will rely on Chinese consumers ‘ loyalty to keep their businesses running.  ,
So far, this reliance is paying off across several sectors. Of the top five brands that command 81 % of China’s smartphone market, Apple is the only non- Chinese one.
Even so, Apple’s market share has declined from 23 % to 16 % in the past two years. In contrast, many international marque brands saw double-digit declines while BYD rose to the top of the sales charts in China last year, up 43 % year over year.
Even in the cosmetics industry, Chinese brands captured more than half of the market for the first time in 2023, growing 21 % year- on- year. Chinese businesses will have a strong growth potential for years to come if they can continue to entice Chinese customers away from foreign competitors in China’s vast market.  ,
Questions remain, however, about whether Chinese firms can turn strength at home into a renewed global push. As stronger Chinese brands emerge, the West may respond with wider- reaching sanctions and restrictions.
US sanctions, in particular, could conceivably follow newly successful Chinese ventures wherever they travel, picking off their international businesses one by one as it did with ZTE, Huawei’s main domestic competitor.
Any US assassination attempt against Huawei could backfire as a wider range of Chinese companies use survival strategies that make use of the loyalty of Chinese consumers, as The Economist earlier this month reassessed its fortunes and prospects.