ReutersMay 29, 2019 14:05:48 IST
Less than a week after Huawei Technologies was blacklisted by the United States, more than a hundred South Korean politicians and business leaders toured the Chinese tech giant’s headquarters and its lavish new campus outside Shenzhen.
Executives from firms such as Samsung Electronics watched demonstrations of high-speed robotics and smart city simulations powered by Huawei’s next-generation 5G network equipment. The event was part of a Seoul-backed forum aimed at building tighter tech links between China and Asia’s fourth-largest economy.
But the gathering was overshadowed by the US decision early this month to ban American tech and telecom firms from doing business with Huawei, and a push to get companies around the world to follow suit.
The campaign against Huawei, and the broader US-China trade war have landed export-driven South Korea in a familiar bind, caught between its crucial security ally and biggest trading partner.
Key global tech companies are suspending sales of parts and software to the Chinese firm and several mobile carriers are delaying the launch of new Huawei handsets. But in South Korea, business executives and politicians said they see few alternatives to conducting business with China as normal.
For Samsung, South Korea’s national tech champion, any advantages it could gain from Washington’s move against Huawei would be outweighed by the pain of lost business, experts said.
Samsung could increase share at Huawei’s expense in smartphones and telecom network equipment, and its stock has ticked up modestly since the US ban was announced. The broader trade war could also blunt the rise of new Chinese rivals in chips and smartphone screens.
“They compete, but they are important partners too,” said Min Byung-doo, a South Korean ruling Democratic Party member of parliament who was part of the tour, referring to Huawei and Samsung. He told Reuters that South Korean companies had “no simple alternative” to maintaining business relationships with Huawei.
Samsung declined to comment.
‘Moment of Truth’
South Korean government officials and tech company executives say there is plenty to worry about in the long run. China is South Korea’s largest trading partner, accounting for 26.8% of the country’s exports in 2018, compared with 12 percent for the United States.
Huawei alone bought $10.7 billion worth of South Korean products last year, accounting for about 17% of the country’s electronics parts exports to China, according to data from the South Korean government and Huawei.
South Korea’s SK Hynix, the world’s No.2 memory chip maker, counts Huawei as its top customer.
“South Korea has to face the moment of truth-choosing the United States or China,” said Han Suk-hee, a professor of Chinese studies at Yonsei University and a former South Korean consul general in Shanghai.
“What if the US is not only asking not to use Huawei products but also not to export South Korean semiconductors to China? The government needs to prepare for that worst-case scenario.”
Washington has warned allies that adopting Huawei technology in 5G networks could lead the US to curtail intelligence sharing.
South Korea’s presidential office said it cannot comment on discussions with Washington.
A South Korean government source close to the situation said there are no easy answers.
“Sorry, we are not the United States, and can’t just do the same as what the US is doing to China,” he said when asked whether the country will join the U.S. campaign against Huawei. “We can’t jump to a simple conclusion.”
LG Uplus Corp, the only South Korean telecom firm to use Huawei equipment for its 5G network, declined to comment.
For its part, Huawei said it plans to open a 5G lab in South Korea on Thursday as a sign of its commitment to partnership.
“Huawei has an ‘In Korea, for Korea’s advancement’ philosophy,” Huawei’s head of Asia-Pacific, Tian Feng, was quoted as saying by South Korean officials who took part in the tour.
Memories are still fresh in South Korea of how damaging retaliation by Beijing can be.
Angry over Seoul’s decision to deploy a US THAAD anti-missile defense system in 2016 to counter North Korea, China informally banned group tours to South Korea and suspended construction projects by retail giant Lotte.
Samsung’s smartphone market share in China halved in 2017 from a year earlier, according to Strategy Analytics. Hyundai Motor’s sales plummeted by one-third as a result of the missile dispute.
At some South Korean companies, officials grumble that their government is powerless to counter China and has not done enough in the face of what they see as unfair subsidies and other trade practices.
“We feel as if we are left alone to fight to survive, not being able to get any government support when the Chinese government is all out there to advance their high-tech industries,” an official at a major South Korean display maker said, asking for anonymity due to the sensitivity of the matter.
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