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Huawei crackdown

Huawei turns to Japan as US blacklisting hits supply chain

China tech giant touts expected $11bn in spending as it woos Japanese suppliers and universities

Huawei Chairman Liang Hua speaks in Tokyo on Nov. 21. (Photo by Yoichi Iwata)

TOKYO -- Addressing a gathering of executives and researchers from Japan's top companies and universities at a luxury hotel in Tokyo on Thursday, Huawei Technologies Chairman Liang Hua spoke of technology, collaboration -- and cold hard cash.

The Chinese tech giant has already spent over $7 billion on procurement in Japan this year, with the total expected to reach $11 billion, he said. This figure will be on par with Huawei's spending last year in the U.S., the company's biggest supplier.

Liang, formerly a supply chain president, was visiting Japan to strengthen ties with Japanese suppliers and hopefully shift the narrative surrounding the beleaguered company. The U.S. Commerce Department blacklisted Huawei in May, blocking its access to U.S. suppliers and customers, and the company is keen to secure new sources of materials and technology.

Liang spoke of the importance of Japanese industry-academia collaborations as well as Huawei's commitment to R&D investment, according to several participants at the event, which included executives and researchers from Fujifilm Holdings, Furukawa Electric, Mitsubishi Heavy Industries and Tohoku University.

"Globalization of the world economy is an irreversible trend," Liang said at a press conference that followed, stressing the importance of a global supply chain for Huawei's technological advancement.

Liang also lauded Japan's strengths in areas such as manufacturing, physics and chemistry, and suggested these could complement Huawei's strengths in namely mathematics and processing. "Japanese companies can benefit from Huawei's network to expand sales of their product world wide," he said.

On the same day, the company published a report saying it had contributed 766 billion yen to the Japanese economy, following the release of similar reports released in cooperation with Oxford Economics in the U.K. and the European Union earlier this year. "We want [people to] understand our company well," a Huawei spokesperson said of the publications.

"Japan is a very important market for Huawei and plays an important role in the supply chain," Liang said at a press conference that afternoon.

The company's revenue rose 24% in the nine months through September. But while smartphone sales in its home market are robust, its businesses abroad are expected to suffer due to U.S. restrictions, including on its use of Google services.

According to Huawei's report, the company spent 721 billion yen on procurement in Japan in 2018, up 50% from 2017.

This translated to a 521 billion yen contribution to Japan's economy, with a further 225 billion yen contribution coming from employment at Huawei itself and indirectly from its supply chain.

Huawei's growing presence in Japan comes as local companies face a slowdown in growth and national universities struggle to secure funding.

The report also said Huawei employed 1,050 people in Japan in 2018, of which 300 worked at its three R&D centers in the country.

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