Chinese telecommunications giant Huawei is going through a rough patch. Governments around the world are eyeing the company with suspicion because of its links with the Chinese government and their role in intercepting and collecting telecommunications traffic. The doubt has led to sanctions being placed on the company, most notably by the US, which limits what business Huawei can conduct within the country. To deal with these potentially stifling barriers, the company has started reaching out to South Korea for its electronic necessities.
A Bright Opportunity
The US supplies a lot of the telecommunications raw material to several Chinese firms. However, they are not the sole supplier, and South Korea, being geographically closer, may have the opportunity to supplant the country as the number-one provider for electronics raw materials to China. In the coming year, Huawei said that it might be spending as much as $11.1 billion in South Korean purchases. Last year’s purchases from the country by Huawei hit the $10 billion mark.
Re-Engineering a Global Supply Chain
Sanctions have forced the Chinese telecom giant to seek its parts elsewhere, and the company has taken on the challenge by looking at other Asian suppliers. The company is looking at the bright side, however. Because of the strict production protocols for South Korean goods, the quality of materials they receive may be higher than what they previously got from the US. Huawei has had a substantial presence in South Korea since 2007, and the existence of their business there makes this transition a lot easier for them.
Spreading 5G in South Korea
Huawei has also aided the country in making its telecommunications network 5G ready. Together with the third most popular carrier in the country, LG Uplus Corp., Huawei has established some 18,000 5G base stations throughout the country. In May, the company opened a 5G lab to aid them in research and development of 5G technologies, taking advantage of South Korea’s technological know-how. If things continue at this rate, the trade sanctions might end up hurting American companies more than it does Huawei.