Huawei is building a state-of-the-art factory in Alsace to resist in Europe

2023-12-21 17:04:00

No building has yet been built. But since April, workers have been busy with earthworks. In the Brumath industrial zone, around thirty kilometers from Strasbourg, Huawei has started construction of a new ultra-modern factory, its first outside the Middle Kingdom. The Chinese telecoms giant is pulling out all the stops: this factory, costing more than 200 million euros, will cover 80,000 m2, and will have 300 employees to begin with. From the end of 2025 or the beginning of 2026, it will manufacture 5G equipment on behalf of European telecom operators, particularly in France and Germany, whose border is very close.

This factory alone symbolizes Huawei’s determination to remain, at all costs, on the Old Continent. The flagship of Chinese tech has been the subject of numerous and violent attacks for years, concerning the security of its products and the possibility that Beijing would divert them for espionage purposes or to cut off communications in the event of conflict. Last spring, it was Thierry Breton who took the plunge. The European Commissioner for the Internal Market called on the 27 member countries to ban Huawei and its compatriot ZTE from mobile networks. “ We cannot afford to maintain dependencies that might become weapons once morest our interests. It would be too great a risk for our common security”he said.

Violent attacks from the United States

These flights of green wood, Huawei is used to them. After excluding the Chinese group from mobile networks in the United States, Washington prohibited it, in 2019 under the presidency of Donald Trump, from sourcing American technologies. For Huawei, the blow was hard. Its sales of smartphones, where it had become a leader alongside Apple and Samsung, collapsed. In 2021, its turnover notably collapsed by 30%, to 634 billion yuan (more than 87 billion euros), before stabilizing in 2022.

Never has the United States devoted so much effort to sinking a foreign company. This is evidenced by the arrest in Canada at the request of American justice, at the end of 2018, of Meng Wanzhou, then financial director of Huawei and daughter of the founder of the Chinese giant. Accused of complicity in fraud to circumvent sanctions once morest Iran, she was finally released almost three years later. Before taking over the rotating presidency of Huawei last April.

The great distrust of the French government

At the same time, the White House has put incredible pressure on the Old Continent to align with its position. This strategy has paid off. The United Kingdom, a historic ally of the United States, has banned Huawei from its networks. This is also the case for Sweden, home of Ericsson, one of the Chinese group’s great rivals. France has chosen to strongly limit Huawei’s footprint in 5G networks. As for Germany, it is now considering following suit.

Many thought that Huawei would throw in the towel in Europe and abandon its Alsatian factory project. This has, moreover, always been observed with suspicion by the government. To the great dismay of the Chinese group, no minister or member of the executive took the trouble to attend an event, in January 2021, to formalize its construction. Which is not common for an investment of this magnitude. Nothing, however, to dampen Huawei’s enthusiasm.

Beijing’s unwavering support

His staff made France and Europe a priority. Above all, Huawei can count on the unwavering support of the Chinese government. Which allows him to reverse many situations. Last summer, France discreetly decided to extend the duration of use of Huawei antennas from SFR and Bouygues Telecom until 2031, instead of 2028 as planned. It was He Lifeng, the Chinese Minister of Finance, who welcomed this during a joint press conference in China with Bruno Le Maire, his French counterpart. The latter undoubtedly preferred to let go of the Huawei issue so as not to offend Beijing, and to allow other manufacturers, such as LVMH or Dassault, to continue their business in the Middle Kingdom…

Behind the scenes, some believe that Germany will also have a hard time saying no to Huawei. On the one hand because its operators, starting with the first of them, Deutsche Telekom, already make massive use of its equipment, and it would be very expensive to replace everything. On the other hand, because China remains, more than ever, Germany’s leading trading partner. Flagship of the powerful automobile industry across the Rhine, Volkswagen sells, for example, no less than four out of ten cars there. Banning Huawei and taking the risk of retaliatory measures undoubtedly gives Berlin pause…

Huawei is banking on Europe’s “pragmatism”

Huawei has taken the measure of European concerns regarding it. But he believes that the prospect of widespread banning is not for tomorrow. Behind the scenes, the group judges that Europe will be able to demonstrate “pragmatism” from his view. He also considers that the Old Continent needs his services. Otherwise, European operators will have to deal with a duopoly, formed by Nokia and Ericsson, on the telecom equipment market. With, in particular, the risk that prices will soar.

In other words: Huawei is today convinced that there will always be customers for the antennas and network equipment that will come out of its new factory. Until then, in Alsace, we welcome this project which should, ultimately, create 500 jobs. As of December 2020, Claude Sturni, the president of the Haguenau agglomeration community, which manages the Brumath industrial zone, did not shy away from his pleasure. “ It is a great pride to welcome this project which illustrates the attractiveness of our territory, and which strengthens an indisputable industrial and technological ecosystem”, trumpeted the elected official. There is no doubt that Huawei is going through a crossroads in Europe. But despite everything, he continues to advance his pawns.