Huawei Applauds the Moon Government’s Anti-Samsung Campaign

The Real Meaning Behind the Nickname “Next Nokia” Is a Curse Wishing for a Quick Collapse

By making an issue of domestic law in the Samsung BioLogics accounting fraud trial, they are holding back international business

Recently, it drew attention when a major media outlet well-versed in industry affairs reported that China’s global telecommunications company Huawei internally refers to Samsung Electronics by the code “NN.”

NN is short for “Next NOKIA.” It is said to carry the meaning that “Samsung Electronics should follow in Nokia’s footsteps” in the sense of collapsing in the mobile phone business. Given that Huawei has issued no denial of this report, the basic fact itself appears to be true.

Huawei’s name (

华为

, Hwawei), meanwhile, is an abbreviation of

中華之作為

and

中華有爲

, both of which mean “working for the Chinese nation.” Quite apart from the fact that Huawei’s founder was a former People’s Liberation Army officer, Huawei’s early domestic business cannot be explained without so-called “patriotic marketing.” As with most companies responsible for China’s key industries, Huawei’s ties to the Chinese Communist Party have already become common knowledge.

In that sense, it is entirely understandable that Huawei refers to Samsung Electronics as “NN,” meaning “Next Nokia.” Huawei and Samsung Electronics are fiercely competing for first and second place in the global smart communications device market. In 2017, when the U.S. government launched an investigation into Huawei on suspicion of violating rules banning transactions with North Korea, a Chinese court ruled in favor of Huawei in its patent lawsuit against Samsung. The absurd claim in that suit was that Samsung Electronics had infringed Huawei’s patented technology. In the same year, Huawei also filed suit against Samsung Electronics in the U.S. District Court for the Northern District of California in San Francisco, claiming that Samsung had infringed its patents there as well.

More recently, reports say that Samsung Electronics and Huawei are engaged in a no-holds-barred strategic battle over the Indian market, which is preparing to commercialize 5G within the year. That is because India is expected to become the world’s second-largest 5G market after China. The problem is that India is not such an easy country to deal with. More troubling still is the fact that the Chinese Communist government has begun moving to check Samsung Electronics through political decisions. Recently, the entity that invested massive funds in the secondary listing offering of China’s No. 1 foundry company, Semiconductor Manufacturing International Corporation (SMIC), was the state-led China Integrated Circuit Industry Investment Fund (CICF). The amount exceeded 3.5 billion yuan (about 600 billion won) from that fund alone.

China has even joined hands with Japan to go after Samsung Electronics. JOLED, the Japanese company that filed a patent suit over OLED technology used in Samsung Electronics smartphone displays, recently agreed to receive an investment of 20 billion yen (about 230 billion won) from CSOT, a subsidiary of China’s No. 1 TV maker TCL. In return, CSOT will own an 11 percent stake in JOLED.

With the Chinese government and Chinese companies going so far as to join forces with Japanese firms to push Samsung Electronics into crisis, the attitude of our political circles and government is puzzling.

The investigation into Samsung and Vice Chairman Jae-yong Lee, which lasted about 1 year and 8 months starting in November 2018, involved around 50 search and seizure operations and some 430 summons interrogations of about 110 people. As a result, a 150-page arrest warrant request, accompanied by 200,000 pages of investigative records, was submitted to the court. After 8 hours and 30 minutes of review, the court dismissed the arrest warrant for Vice Chairman Jae-yong Lee and others. Yet the current government, the Democratic Party, and the prosecution still appear relentless in their determination to punish Vice Chairman Jae-yong Lee. Even after the Prosecutorial Investigation Deliberation Committee recommended halting the investigation into him, their stance remains unchanged.

The problem is that, in Samsung Electronics’ case, most of its business and sales arise overseas, so many things that pose no issue under international law end up conflicting with domestic law, and punishment under domestic law affects its international business. A representative example is the accounting fraud allegation involving Samsung BioLogics.

Under the current claims of the Securities and Futures Commission under the Financial Services Commission and the prosecution, leading domestic accounting firms and Samsung BioLogics colluded to commit accounting fraud on the scale of 5 trillion won. But this valuation came from Samsung BioLogics re-evaluating its corporate value not for a KOSDAQ listing but in preparation for a NASDAQ listing. Accordingly, had an IPO roadshow for a NASDAQ listing proceeded, this would have been a matter reviewed and scrutinized by overseas investment funds and financial professionals alike. How could a global company like Samsung carry out such accounting fraud against foreign investors?

The other charges currently applied to Vice Chairman Jae-yong Lee are no less absurd when examined closely. Most involve matters that had already not been deemed problematic. So why are they being raised again now? There is a clue to understanding this.

On July 15, 2018, about three months before the prosecution began its investigation into Vice Chairman Jae-yong Lee, Hong Young-pyo, then floor leader of the Democratic Party, wrote on his Facebook page that “if Samsung released 20 trillion won, it could give 10 million won each to 2 million people.” In a word, it was the kind of astonishing logic one might hear only in Venezuela.

Perhaps the one smiling most broadly at the political establishment, government, and prosecution’s campaign to destroy Samsung is China’s Huawei, which longs to see Samsung become the “Next Nokia.”

Jungseok Han, Steering Committee Member, Citizens’ Coalition for Better Society; former KBS producer

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Original title: 문 정부의 삼성 죽이기에 박수치는 화웨이

Author: Jeong-seok Han

Date: 2020-07-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=20&idx=22970