The Chinese government is helping local companies grow. But Huawei received help on a much larger scale than other firms.
Huawei has grown from a little-known telephone exchange manufacturer into the largest global telecom equipment vendor. She was helped to become a leader by a strategy of significant price reduction, sometimes by 30%. Huawei received financial resources for a price war with competitors from the Chinese government, writes the Wall Street Journal.
The Chinese authorities provided Huawei with grants, loans, tax credits and other forms of financial assistance totaling $ 75 billion. The first such operations began about 25 years ago.
“Huawei has commercial interests, and they are substantially supported by the state,” said Michael Wessel, member of the US-China Relationship Analysis Commission, in an interview with the publication.
The largest segment of assistance – about $ 46 billion – consists of loans, credit lines and other assistance from state lenders. Huawei also saved $ 25 billion in taxes between 2008 and 2018 thanks to government initiatives to promote the technology sector. The company received another $ 1.6 billion in grants and $ 2 billion in the form of discounts on land.
Company assistance is not always possible to evaluate in numbers. In 1999, the Chinese government saved Huawei from tax fraud allegations through its intervention. Help Huawei also manifested itself in the form of assistance to its customers. For two decades, Chinese banks have provided $ 30 billion in loans to customers. According to the World Bank, money was issued at a low interest rate, some received money at 3% per annum.
Huawei said the company received “small and intangible” grants to support its research. According to her, this is not unusual. Most of the help, such as tax breaks, is available to other companies, Huawei representatives said.