Blessing or curse? Chinese electronics giant Huawei announced Thursday (February 27th) that it will build its first large factory outside of China in France. The key: 500 direct jobs and substantial investment in research and development (R&D). But, also, some diplomatic headaches for Paris. It is not good to do business with Huawei at the moment. The company is in the crosshairs of Washington, which accuses it of posing a threat to American "national security".
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Liang Hua, president of Huawei, knows that his group does not smell of holiness vis-à-vis the United States. He also made a special trip to Paris to confirm this highly symbolic project to set up a first equipment manufacturing plant in a third country. The group already has a presence in several other countries in Asia, but these are only assembly sites.
“Communication operation”
The Chinese boss has for the moment been stingy with details, specifying neither the location of the factory nor the project schedule. He was content to specify that “the first phase” - purchase of land, materials, buildings - should represent 200 million euros of investment and that ultimately the factory would be used to produce radio equipment for networks telephone.
These are the famous network antennas that can be used for the first stage of the deployment of 5G. This future factory is therefore at the heart of the global diplomatic-technological battle around these new generation telephone networks, which are supposed to be crucial for the development of autonomous cars and the Internet of Things. The United States does not want a company with supposed ties to the Chinese military to install such critical infrastructure, while Europe is still hesitant.
This is where the French Huawei factory can tip the scales. "It is clearly also a communication operation intended to underline the interest for European countries not to align themselves with American positions", affirms Jean-François Dufour, economist and director of the consultancy firm DCA Chine Analyze, contacted by France 24. The timing is indeed eloquent, confirms Sylvain Chevallier, partner at the technology consulting firm Bearing Point. "We are currently in the midst of a reflection process at European level on the advisability of associating Chinese groups like Huawei with the deployment of 5G", underlines this expert, contacted by France 24.
In this context, the choice of France owes nothing to chance. First, because “the technological fabric, and the French network engineers are renowned and that Huawei has already invested in this sector near Nice”, recalls Jean-François Dufour. Then, because "Beijing knows that the two main countries wanting to be commercially more cautious with regard to China are Germany and France", continues the French economist. But while Berlin lives to the rhythm of the end of Angela Merkel's reign, Huawei could have said that it would be diplomatically more effective to please Paris. Last year, moreover, CATL, a major manufacturer of batteries for electric cars, had announced the construction of a large factory in Germany and “the Chinese could have considered that it would be wise to alternate so that France does not do not tell yourself that it has nothing to gain with China ”, says Jean-François Dufour.
France rather than Germany
But is it in France's interest to let the economic enemy number 1 of the American administration enter its territory? From an economic point of view, the benefits are obvious. The Chinese announcement “confirms the attractiveness of France in terms of telecommunications, since with Huawei, these are now the three main network equipment manufacturers - Nokia, Ericsson and Huawei - who have strongly bet on the country”, underlines Sylvain Chevallier. The establishment of the new factory will also be accompanied by investments in R&D which should act “like a virtuous circle, since there will be a need for engineers, therefore more university and other training, which will contribute to strengthen French attractiveness ”, continues this specialist in the telecoms sector.
From a political and diplomatic point of view, “the whole question is whether or not France wants Huawei equipment for its telephone network. For the moment, the authorities do not seem to be completely opposed to it. If this is the case, you might as well have the radio equipment built in France rather than in China ”, summarizes Jean-François Dufour.
In fact, the French doctrine on the subject is similar to that of the other main European countries: “as regards the heart of the network architecture, the tendency seems to be not to appeal to sensitive groups like Huawei, but for equipment such as antennas, Europe is more open, provided that the equipment manufacturers pass safety tests ”, notes Sylvain Chevallier.
In this sense, the announcement of the construction of a Huawei factory for the production of radio equipment does not change the situation. There would therefore be no reason, according to the experts interviewed, for this site to provoke the ire of Washington since it is part of current doctrine and does not indicate that France opens up the door to the Chinese group. But the Trump administration has shown that it can be unpredictable in its reactions and particularly touchy when it comes to China.
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