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Challenge of the trade war for the ICT market

  • Published at 07:33 pm November 17th, 2019
Collaborate or collide? Bigstock

 Trade wars only hinder economic progress in the long term for everyone involved

Everyone is now aware of the trade war going on between the USA and China. But who will gain and lose in this war? Is there any future of this war?

If we look into early American history, the US has not always been a free nation. The country went through colonization for nearly about 300 years and they were too once a country with needs. It is only after their independence in 1776, they started developing their socio-economic structure and gradually came to today’s position.

Things changed drastically for them during the industrial revolution and technological advancement period which started in the early 19th century. But most of the inventions including the telephone, the telegraph, electricity, locomotive, etc were invented in Europe and the US adopted those technologies later and used successfully for the betterment of their country. 

Basically, the US is the most tactical user of world inventions.

Now let’s have a look at China. This Asian country has been the fastest growing economy in the world since the 1980s, with an average annual growth rate of 10% from 1978 to 2005, based on government statistics. Its GDP reached $2.225 trillion in 2005. After the end of the Maoist period, China has been transitioning from a state dominated planned socialist economy to a mixed market socialist economy.

This transformation required a complex number of reforms in China's fiscal, financial, enterprise, governance, and legal systems and the ability for the government to be able to flexibly respond to the unintended consequences of these changes. This transformation has been accompanied by high levels of industrialization and urbanization, a process that has influenced every aspect of China's society, culture and economy.

From the beginning of the 21st century, Huawei began mass marketing of networking technology in the global marketplace. Within this time, Huawei started dominating the Asian and African countries. They also started competing with Cisco, Siena, Siemens, Alcatel, Ericsson, and Nokia in the US and European markets.

By this time, Huawei's market share in Asia and Africa reached 60% and has more than 20% market share in Europe. Huawei is the only company in China that has defied itself with cyber-security vulnerabilities and has also received international recognition for “safe technology.”

But still, now, US companies are dominating the ICT market clearly, including software and hardware both. According to Statista, US company Cisco is number one for enterprise network equipment, Siena is number one for broadband internet or fiber optic transmission equipment and If we say about chip-set and microchip to make the device, Qualcomm, Intel, Dell have taken over most of the market. Only in terms of telecommunications radio equipment, China's Huawei is ranked number one in the world market with a 20% share. 

Huawei is the only Chinese company to have positioned itself in the world of information technology, and in such a short time, Huawei has become so widespread in the world that it has caused great discomfort to the US. Though the statistics say that the US is still on the top of the market, Huawei has now shaken the fear of US companies in the global market and this company has been banned to do business in the US in different spares of time. 

Now, is it entirely to Huawei’s loss if no business occurs between the US and Huawei? The answer is no. We need to realize that, despite the unfavourable situation in the US and its allies, the rise of Chinese company Huawei is a real surprise in the information technology market. This situation will affect the companies that export parts to Huawei and as they happen to be US companies, their loss of revenue will hit the US economy too. 

And also let us look into the history of the US’s adoption of global technologies as I mentioned before in before. What if the US had not adopted the technologies that had not been invented or developed in their country? Would the economy be the same as now?

Again, the answer is no. Because it is not possible for a single country to develop itself without taking some help from others and it is not possible to invent every technological equipment. This is where collaboration worked for them. They took others' help in trading, or in doing business with others. This business policy worked for all of them that worked together because every one of them developed their socio-economic structure. 

The world now lives in the information era. In this era, it is not possible for a country to single-handedly make anything and to proceed for successful development. Open collaboration is a must. Through open collaboration, it is possible to bring down prices of technological equipment and, as a result, more people will get the benefit of new technologies at a lower cost.

It also impacts the economic development of a country and economic development not only affects a country’s GDP but also improves the living standards of mass people so that more people can be lifted out of poverty. But this development is not possible by moving alone and this is where collaboration comes.

The theory is to move together for the betterment of all. 

But, if this type of trade war keeps on going, it’s the general users who are going to be impacted the worst. Huawei's rise in the world of information technology has made it easy for ordinary users to access networking technology, from appliances to devices -- all at affordable prices. But due to today's “wartime” the price of technology products may go up.

At the end of the day, the least developed and developing countries who are in the way to journey for “digital society” will be impacted badly. Therefore, it is hoped that this trade war comes to a swift end.

Rased Mehedi is a freelance contributor.