The trade war between the US and the Chinese tech giant Huawei, which escalated last week have landed South Korea place. The export-driven country is caught between having ties with its security all, the US and its biggest trading partner, Huawei.
Shortly after Huawei technology was barred from doing business with US companies, over a hundred South Korean politicians and business leaders visited the Chinese tech giant’s headquarters and the newly build campus. There were demonstrations of high-speed robotics and smart city stimulations powered by the 5th generation network manufactured by Huawei to the excitement of the executives from Samsung Electronics.
However, the US had championed a campaign earlier this month to restrict tech companies within the country and its allies from doing business unless the trade is licenced. The decision to put Huawei out of market overshadowed the event which part the Seoul-backed forum to create tighter business links between China and South Korea.
Mobile operators are delaying the lauch of Huawei mobile phones to commemorate the instruction from Washington; Google and ARM are doing likewise to withhold the sale of source parts from the tech company. In South Korea, however, the business executives and politicians say there are no simple alternatives to the business dealings in China.
Bowing to the pressure to blacklist the Chinese tech firm would be more advantageous than losing a strong business ally, experts said. Samsung has enjoyed a rise in stock since the announcement of the Huawei ban, making it plausible for Samsung to increase its shares at the expense of Huawei’s loss.
By extension, the trade-ware between both parties could silence other Chinese based rival companies in chips and smartphone screens, streamlining the option to Samsung. However, Huawei is one of biggest customers for Samsung’s memory chips, coupled with the numerous factories the company has in China, serving the needs of many customers. Dancing to the tune of the US could put all these gains at risk, thereby causing dwindling profits and sales.
Even though Huawei is a big competitor for South Korea’s champion in tech, they are also valid partners making the choice a difficult one for them. The truth remains that being in such a situation is a cause of concern in the long run.
As reported by Reuters, “China is South Korea’s largest trading partner, accounting for 26.8% of the country’s exports in 2018, compared with 12% for the United States. Huawei alone bought $10.7b 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.”
Some experts believe that South Korea cannot possibly have both warring factions as partners or allies. It has to choose one. The US government had warned that adopting Huawei technologies for their upgrade to the 5G network puts the country at a risk of military espionage.