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Home / Mike Norman Economics / Sputnik International — Expert on Huawei: US Hopes to Maintain Its Monopoly in IT Field, but This Attitude Is Short-Sighted

Sputnik International — Expert on Huawei: US Hopes to Maintain Its Monopoly in IT Field, but This Attitude Is Short-Sighted

Summary:
The elephant in the room now is that the tech market is global and the rising demand is in non-Western emerging economies, where price point can be determinative. Huawei is succeeding because it can produce highly competitive products not so much because they are superior technologically but because they are adequate and less expensive than the competition. Apple has chosen to position itself as a luxury product and so it is not chiefly threatened. But the bulk of tech market is price-sensitive and will go with the lowest price products that adequate rather than products that are either "optimal" or "bling." LINUX is a open source operating system based on a Unix-like kernel that is already available. Steve Jobs built OS X on a descendant of Berkeley Software Distribution (BSD) that

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The elephant in the room now is that the tech market is global and the rising demand is in non-Western emerging economies, where price point can be determinative. Huawei is succeeding because it can produce highly competitive products not so much because they are superior technologically but because they are adequate and less expensive than the competition. Apple has chosen to position itself as a luxury product and so it is not chiefly threatened. But the bulk of tech market is price-sensitive and will go with the lowest price products that adequate rather than products that are either "optimal" or "bling."

LINUX is a open source operating system based on a Unix-like kernel that is already available. Steve Jobs built OS X on a descendant of Berkeley Software Distribution (BSD) that was based on Research UNIX. It's not like Huawei with its enormous resources would have to pioneer something entirely innovative to be competitive. It would even be possible to develop an Android alternative.

What about chips, you say. Well, it's not like the budding Russian-Chinese alliance can't or won't develop a competing chip industry. No doubt this has already been in the works for some time, since both Russia and China know their tech vulnerabilities.

Google knows that and is concerned enough to lobby the Trump administration against attempting to isolate Huawei and by implication other Chinese technology companies. Google is using an argument based on national security in this regard, but but the subtext is that trying to use anti-competitive policy against China is likely instead to increase the threat of Chinese competition by forcing China to become self-sufficient and independent of the West, just as US sanctions have forced Russia to adopt import substitution.

It doesn't look like POTUS has sufficiently thought this through, especially knowing that China is a long hauler whereas Wall Street is quarter to quarter.
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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