Wednesday, 01 July 2020 11:39

Japanese firms leap into breach to supply China after US strictures

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Japanese firms leap into breach to supply China after US strictures Image by Masashi Wakui from Pixabay

Restrictions placed on American firms to prevent them from playing a role in helping China roll out 5G networks are being neutralised by Japanese companies who have leapt into the breach and are filling their pockets while supplying the needed gear.

The Wall Street Journal reported that China had plans to deploy more than 500,000 base stations as it moved aggressively to cover the country with 5G technology.

One Japanese company which is benefitting from the supply of equipment to China is electronic-component maker Murata Manufacturing whose chairman was quoted as saying: “The Chinese government is enthusiastically promoting the spread of 5G. It’s a very promising market for our parts."

The US introduced fresh restrictions on Chinese telecommunications equipment vendor Huawei Technologies in May, making changes in its Foreign Direct Product Rule which prevents a company from buying goods that are produced using American technology or equipment, no matter whether the firm making them is American or not.

Last May, Washington had placed Huawei on a black list which prevented American companies from selling products that had more than 25% American content to the firm, unless they obtained a licence.

The WSJ report said that while the US and China were fighting over technology leadership, Japan was supplying goods to both sides and avoiding any political slip-ups.

Export controls unveiled by the US have mostly hit American companies. But former US trade official Wendy Cutler said these export controls could be extended to US allies as well.

The report said Japanese companies were deriving healthy profits from selling to their Chinese counterparts. Anritsu, which makes machines that monitor the functioning of 5G base stations, had seen a 75% profit rise in the second quarter, compared to a year ago.

It is not yet clear how the latest US strictures will be interpreted and lawyers are working to understand the full implications.

But, as Martin Chorzempa, research fellow at the Peterson Institute for International Economics, put it there is a risk of de-Americanisation of global supply chains with foreign companies avoid US technology altogether to avoid coming up against US export controls.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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