Tuesday, October 19

Huawei’s large 5G factory

The network supplier is planning a cell phone production in France. It is the first of its kind outside of China – a world first. What’s behind it?

What will happen to Huawei as a result of the pressure from Washington?

What will happen to Huawei as a result of the pressure from Washington?

What does China’s largest technology company Huawei, which critics would like to ban from the western economy because they accuse it of espionage and worse? He tries his luck with a hug strategy in sometimes hostile territory. For many months, the company has been trying, verbally, personally and financially, to turn against the mood, which was primarily fueled by the American Trump administration. The latest step on this strategic path is one of the more significant: an investment project in Alsace.

In the Brumath industrial estate, 25 kilometers north of Strasbourg, a European cell phone factory is to be built by 2023. According to the company, it is a global premiere, namely the first production facility of its kind outside of China. After the opening of the “Huawei European Wireless Factory” in two years, 500 employees will ultimately manufacture products worth one billion euros annually. At its core, it is about the new 5G mobile radio standard – components for base stations. The company explained that the factory will produce the main part for European customers. Construction work is scheduled to begin this year.

Huawei’s Chairman Liang Hua announced the € 200 million project at the end of 2019 without giving all the details at the time. In February 2020 there was officially only one project in France. The now chosen location is said to have distilled itself out of 50 proposals made by the French economic development agency to Huawei management. The decision was very well received in regional politics. According to President Jean Rottner, the Grand Est region sees itself strengthened in its ambitions to become a French reference area for innovation. The head of the municipality of Haguenau, Claude Sturni, welcomed the “ambitious” factory project “with great pride”. The Chairman of the Board of Directors of Huawei France, Jacques Biot, referred to the “trusting cooperation” between the network supplier and state, regional and municipal representatives.

Germans could also benefit from it

First and foremost, the Chinese cited economic reasons for choosing the location, which is only a few kilometers from the German border. With Alsace, the plant is at the heart of the Huawei supplier network and therefore close to European customers. The advantageous location is reinforced by the “solid air, land and river infrastructure of the Grand Est region”. France and the region had a competitive industrial fabric supported by highly qualified engineers and technicians. Germans could also benefit, one can hear in the group. Reference is made there to the proximity to Baden and the possibility of commuting to Brumath.

For France, it should also have been said that the investor allows the country to catch up. Otherwise, Huawei has a good presence in Europe with 13,800 employees. Germany has important corporate locations: the Western European headquarters are located in Düsseldorf, the largest European Huawei research center with 400 to 500 workplaces in Munich, and a “research factory” in Weilheim. The company has a total of 23 research and development facilities of its own in Europe. In the future, a real production will be added with the France project.

Immoral offer or good deed?

None of this should appease critics, on the contrary. Rather, some suspect an “immoral offer” when the company promises investments. Because France is the last of a series of destinations for Chinese money to date. The group does not hold back with its – from its own point of view of course very positive – influence: Oxford Economics recently commissioned a study. Their result: Huawei contributed 16.4 billion euros to Europe’s gross domestic product in 2019, generated 6.6 billion euros in tax revenue and supported 224,300 jobs.

Some observers see this money as an attempt to win over politicians who also decide on Huawei’s business fate in Europe – namely through possible exclusions from the 5G development. A company spokesman prefers to speak of a “confidence-building measure” with regard to the investment in France. The hug strategy seems to be working: In Europe, the glass for Huawei is half full, it is said, after all.