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Message: <blockquote data-quote="Angel" data-source="post: 11248" data-attributes="member: 980">5. The impact of the Huawei ban on businesses and law firms ([USER=1]@Jaysen[/USER])The story:It’s fair to say that this month has been hell for Chinese tech giant Huawei. On May 15, 2019, the US government announced a ban on companies exporting US technologies to Huawei, unless they obtained a special licence. Trump’s administration based the ban on the grounds that Huawei was a national security threat.The pain was felt this week. Google said that it would restrict Huawei’s access to some of its Android operating system (although this was later put on hold after the ban was delayed). This was soon followed by the likes of Intel and Qualcomm, which have reportedly stopped selling their parts to Huawei.Impact on businesses and law firmsLet’s start with Huawei. It’s the second biggest smartphone seller in the world and the biggest seller of network infrastructure. However, the Chinese giant relies on American companies for hardware, software and licences. With the ban in place, costs will rise as Huawei will be forced to develop new supply chains when its current stockpiles run out. Should Google’s restrictions go ahead, the limitations to Android will impact the tens of millions of phones it sells internationally every year. With that in mind, Huawei is unlikely to escape significant trade disruption. The company’s CEO has already said the company’s annual revenue growth may undershoot by 20%.Then there are the wider commercial implications, so concerning that some have called the Huawei ban the start of a US-China cold war. These events are taking place against the backdrop of tightening restrictions on foreign companies and, crucially, the US-China trade war. It may just be the case that the US is flexing its muscle to bring China back to the table for trade talks. Perhaps, if China provides further intellectual property protections, the US will lift sanctions. Even so, these orders cause collateral damage. Huawei is a big source of revenue for many American suppliers. One analyst suggests US tech company Xilinx could see $300m wiped off its annual revenue over the calendar year. It’s not only the US either; European technology stocks fell after Germany’s Infineon said it would cut some of its shipments to Huawei. If Asian suppliers follow suit, the impact on Huawei would be devastating. And, if China retaliates, it would be even worse. American companies with significant exposure to China fear tighter regulations, slower customs clearance, delayed licence approvals and further antitrust investigations. Law firms will play an essential role in helping US companies insulate themselves from the effects of the trade war, such as relocating manufacturing facilities outside of China.And what of 5G? Huawei has become of a major symbol for China’s ambitions on the world stage. However, the US has waged a global campaign to stop the use of Huawei’s network equipment, raising fears that China could use these systems for spying or sabotage. This has come at a time when cyber-hacking has been flagged as one of the biggest issues facing multinational businesses and law firms. But, in Huawei’s case, are these genuine fears or is the US merely scared of a rising global competitor?Suppliers now have 90 days (thanks to a temporary exemption granted this week) to work out how to proceed without damaging their lucrative contracts. Law firms will be relied on to help global firms comply with US export controls. The risk to doing overseas business is rising, which means growing sanctions-related work for law firms. They should help companies assess their exposure to Huawei, as well as other firms that could become caught up in the crossfire. This includes interpreting Trump’s recently signed executive order, which is expected to prohibit the use of gear from “foreign adversaries” with national security risks.</blockquote>

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