The strategy of synchronous ecosystem development is familiar to large smartphone manufacturers. Apple helps suppliers get the right components to production, and Huawei Technologies does a similar tactic. The only difference is that due to US sanctions, the Chinese giant will have to focus on financing domestic suppliers.
In April 2019, Huawei established a subsidiary, Habo Investments, which focused on investing in promising companies that should become suppliers and partners of Huawei Technologies. Since August last year, Huawei's investment arm has closed 17 deals with Chinese companies, according to Reuters. For example, such a financing scheme has already allowed the Chinese sensor developer Vertilite to become a supplier of core components for Huawei smartphones.
Habo Investments will invest in Chinese start-ups in order to develop young companies over time into stable suppliers of the right components. If earlier Huawei also looked closely at foreign assets, then the tightening of sanctions over the past two years forced it to focus on the domestic market. Those areas for investments are selected that will support Huawei in the coming years: these are not only smartphones and telecommunications equipment, but also traction batteries for electric vehicles. As a rule, the Chinese giant prefers to buy no more than 5-10% of the shares of the company it is interested in.
As one former Huawei employee interviewed by Reuters notes, the company prefers to develop the necessary technologies and components on its own, so investing in or taking over other market participants is considered a last resort when there are no other ways to get the necessary know-how.