Huawei should dissolve, disperse and seed China’s high-tech future

HUAWEI, A CHINESEGRD firm emblematic of the breakdown in Sino-American relations, makes for a perfect business-school case study. Less than two years ago the company, based in the southern boom town of Shenzhen, had not only surpassed Nokia and Ericsson, its Nordic rivals, to become the world’s leading supplier of telecoms infrastructure. It had also overtaken Samsung to become the biggest seller of mobile phones. Like all good case studies, it has vivid characters, from its founder, Ren Zhengfei, a former army officer and engineer, to his daughter, Meng Wanzhou, just freed from a starring role in the first prisoner-exchange drama of the tech cold war. It is a groundbreaking firm. Like Japan’s Sony in the 1980s, it helped change the perception of its home country from one of cheap knock-offs to eye-catching innovation. And its very future may be in peril. With the long arm of American law enforcement around its neck, it is being throttled by a lack access to cutting-edge technology, such as 5 smartphone chips.The question is what Huawei ought to do next. Should it tough out American sanctions and hope, as Victor Zhang, its global vice-president, puts it, that its research and development (&) budget, a whopping $21.8bn last year, can “fertilise” a new array of business activities that will redefine its future? Or should it instead quietly break itself up, dispersing a 105,000-strong army of engineers to seed a flurry of new ventures? In short, should it remain a tall poppy or let a hundred smaller flowers bloom?