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Huawei Faces Escalating Legal and Financial Challenges Amidst Scandals

Huawei Faces Escalating Legal and Financial Challenges Amidst Scandals

The Chinese tech giant is under scrutiny for alleged bribery in the EU, spiraling financial woes, and a history of espionage claims.
Huawei, the Chinese technology giant, is once again making headlines as Belgium's judiciary confirmed ongoing investigations into allegations of bribery involving members of the European Parliament.

The investigation focuses on claims that Huawei provided extravagant gifts, including trips and football match invitations, to influence decision-making within the European Union, a situation that raises suspicions of potential bribery, forgery, money laundering, and organized crime by Huawei's lobbyists.

This latest scandal is not the first for Huawei.

The company was embroiled in a significant legal battle in 2003 when the American technology firm Cisco accused it of stealing intellectual property.

Cisco claimed that Huawei had copied parts of its router software code and violated multiple patents.

Huawei acknowledged that some of its code contained Cisco's, leading to the removal and modification of affected products, culminating in a settlement reached a year later.

This disclosure adversely affected Huawei's reputation and raised questions about its business practices, initiating a series of accusations concerning espionage and technology theft.

In 2018, several governments, led by the United States, accused Huawei of having ties to the Chinese government and utilizing its equipment for espionage activities.

Consequently, countries like Australia, New Zealand, Canada, Japan, and the United Kingdom joined the U.S. in banning the use of Huawei technology in their 5G networks.

That same year, Huawei's Chief Financial Officer and daughter of the company's founder, Meng Wanzhou, was arrested in Canada at the request of the United States, initially under accusations of violating sanctions against Iran.

U.S. authorities subsequently added allegations of theft of trade secrets, fraud, and money laundering against her.

This incident significantly impacted Huawei, leading to a decline in its market position, with the company subsequently falling to the sixth place in smartphone sales in China.

Meng Wanzhou was released after nearly three years under house arrest following a settlement with U.S. authorities.

In July 2019, it was revealed that Huawei had secretly assisted North Korea in building its wireless network since 2016, violating U.S. export regulations and international sanctions.

However, Huawei denied any direct business relationships with North Korea and affirmed its commitment to comply with all applicable laws and regulations in the countries and regions where it operates, including U.N. and U.S. export laws and European Union sanctions.

Financially, Huawei continues to face severe challenges attributed to international sanctions and various scandals.

In 2020, the company sold its sub-brand, Honor, to mitigate restrictions affecting it.

Notably, Huawei experienced a significant decline in sales in 2021 and 2022 as competitors like Xiaomi and Oppo gained market share.

In 2021, Huawei reported its first annual revenue drop, with a 28.5% decrease to 636.807 billion yuan (approximately 91.038 billion euros), following growth rates of 3.8% in 2020 and 19% in 2019.

Furthermore, Huawei’s mobile phone sales plummeted from 240 million units in 2019 to below 40 million in 2022, negatively impacting the company’s overall sales performance.

In Spain alone, Huawei recorded revenues of 801 million euros in 2023, a 29% decrease compared to the same period the previous year.

The company's net profit in Spain was reported to be 21.5 million euros, marking a 28% decline from 2022, amid the continuing effects of the U.S. trade bans.

Additionally, the workforce at Huawei Spain has been cut nearly in half since 2019, dwindling from 1,200 employees to 743 in 2023.
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