The Wall Street Journal reported on the 25th that Huawei received huge financial subsidies from the Chinese government to help its rise. In response, Huawei issued a statement on the afternoon of the 26th, stating that the Wall Street Journal’s report was based on misinformation, ignoring Huawei ’s huge investment in research and development over the past 30 years and the long-term hard work of 190,000 employees focusing on customers.
Huawei is a 100% employee-owned private enterprise. For more than 30 years, Huawei has consistently invested 10% to 15% of its sales revenue in research and development every year, and has accumulated about $73 billion in research and development in the past decade. In 2018, Huawei’s R & D expenses amounted to US $15 billion, ranking fifth in the world in the 2018 EU Industrial R & D Investment Ranking, far exceeding the rankings of Cisco (25), Nokia (27) and Ericsson (43). From 2009 to 2019, Huawei invested more than 4 billion U.S. dollars in R & D in the 5G field, exceeding the total 5G R & D investment of major equipment suppliers in Europe and the United States. The huge R & D investment has driven Huawei’s innovation and development, which is a key factor for Huawei’s success.
Huawei’s relationship with the Chinese government is no different from that of other private companies operating in China. Like other high-tech enterprises (including foreign-funded enterprises) in China, we enjoy the Chinese government’s policy support for high-tech enterprises, without any special treatment. Huawei’s operating funds mainly come from its own business accumulation and external financing, not government subsidies. In the past ten years, the company’s own operating accumulation accounted for nearly 90%; the company’s external financing operations are all market-based operations, and the cost of debt is in line with market levels.
In fact, in China, qualified high-tech companies (including foreign-funded companies) are entitled to apply for relevant subsidies from the Chinese government, which are mainly used to support research projects. Huawei also applies for relevant subsidies through normal channels. As reported in the report, subsidies for high-tech research projects in Western countries are also very common. In the past ten years, Huawei has received less than three-thousands of revenue from domestic and foreign R & D-related government subsidies, and government R & D subsidies accounted for only two-thousands of revenues in 2018.