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Huawei carries on in Russia as other Chinese firms wait and see

Western hi-tech companies from Apple to Ericsson might have walked out of Russia, but it's a more complex story for Chinese companies.

For example, rideshare firm Didi, which was planning to close its loss-making Russia business for business reasons, changed its mind after fierce public blowback.

PC and server maker Lenovo, which still relies on IBM licensing agreements, was reported by an independent Belarus news site to be planning to leave. It has made no comment.

For the usual suspects like Huawei and ZTE – Huawei has been accused of breaking international sanctions on Iran, while ZTE was caught red-handed – it seems to be business as usual.

Huawei is the biggest network equipment supplier in Russia. It has just deployed a 5G network for MTS, Russia's largest operator, in a deal struck during a 2019 summit between the Chinese and Russian leaders.

With its close alignment with the China government, it may be playing other roles as well.

In the first days following the invasion, multiple Chinese online newsites reported that Huawei would "rush to the rescue" of Russia as it came under cyber-attack. A social media post from a state-affiliated telecom publication said Huawei would train up to 50,000 Russian engineers to help run its networks.

These posts have been deleted and Huawei is not responding to inquiries.

Huawei is also continuing to work in Ukraine where 18 months ago it caught the attention of Trump administration officials, who reportedly offered funds to the Ukraine government to replace Huawei equipment.

Nothing seemed to come of that and Huawei continues to supply 4G equipment to Ukraine's biggest operator, Kyivstar (a subsidiary of troubled Netherlands-based Russian operator Veon).

A post on the Huawei Ukraine Facebook page just before midnight on February 28 said 50 network engineers would continue to serve their Ukraine customers.

"We also plan to provide free network equipment to prevent network overload due to user load in the western region," it said.

The post, since deleted, said, "we regret the disaster and loss suffered by the Ukrainian people."


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While the exit of western brands from Russia looks like a golden opportunity for Chinese firms, it's not quite so straightforward.

Many of them, like Lenovo, have business ties with the west that they won't want to put in jeopardy.

As reported by the Wall Street Journal, other factors come into play, such as the country's almost total isolation from the world's financial system and logistics issues.

Additionally, the sanction rules for non-military ICT equipment, based on the restrictions imposed on Huawei three years ago, are fiendishly complex.

It's not just Chinese firms that are moving cautiously.

Samsung Electronics, which has a third of the Russia handset market, has suspended shipments as many other companies have done, but is not yet walking away.

A Korean IT industry official told Korea Times Korean exporters are waiting for the government to take a clear position.

"From the perspective of Korean companies, it is not right for them to push ahead if their government does not take a lead role in the sanctions," the industry official said.

— Robert Clark, contributing editor, special to Light Reading

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