24 May 2019

It’s good to talk - let’s hope that filters through to the Huawei debacle.

It is 186 days since Carlos Ghosn's arrest on 19th November in Tokyo. Ghosn’s transition from hero to alleged villain had the suddenness and force of a rocket falling out of space and hitting Earth. He maintains his innocence against accusations of crimes ranging from falsification of documents to diverting millions of dollars from Nissan for his personal use. Meanwhile, the future relationship legally and in terms of goodwill between Renault and Nissan remains open.

Pre-trial proceedings against Ghosn began on 23rd May for his trial, which probably will not start until 2020. The pre-trial proceedings began at the Tokyo District Court's 17th Criminal Court Division, with its first tasks to see if the extent of the charges can be narrowed- there are times when you think the Japanese authorities have thrown everything at Ghosn and in wilder moments you suspect that lurking amongst the charge sheets is him taking the wrap for the indifferent reviews for the last series of Game of Thrones. Seriously, the judicial process has started and the mist of conjecture begin to lift as a legal argument and forensic analysis take centre stage. What’s on trial is just not Ghosn, but the fairness of the Japanese legal system and Nissan- are we watching a wronged company seeking justice or a conspiracy played out before the world’s glare?

The Ghosn affair for all its tragic and Shakespearian qualities seems like the matinee performance compared with the ongoing implications of Google's ban on Huawei and the impact of an escalated trade war on other Chinese smartphone makers. Huawei asserts they are an independent Chinese company providing costs effective solution in relation to 5G and connectivity. Others, especially the US Trump administration suspect Huawei as an organ or the Chinese state - a Trojan Horse to spy upon possibly undermine Western economies.

The general shift towards protectionism by the US-allied to a gradually populist nationalist shift in various countries provides an inconvenient backdrop at a time when auto and tech industries need to collaborate if not fuse to meet the ongoing challenges of connected, environmentally friendly mobility. Standard terms and systems are vital for the free movement of products as well as achieving economies of scale. Of course, this needs to be balanced against the need to protect individuals data and privacy as well as national security. Also, this breakdown in trust as seen by the Huawei debacle will risk stifling innovation and international collaboration.

In Russia, for instance, the Renault-Nissan-AvtoVAZ partnership has handed its dashboard sat nav software installation to local search engine Yandex in Russia as opposed to Google. Yandex was the first company to establish an internet search engine in Russia and remains the largest player even after Google entered that market. In 2015, Yandex won an antitrust claim which enabled them to pre-install its services on smartphones powered by Google's Android operating system in Russia.

A few salient points come from the Yandex example. First, not all roads lead to Google and Facebook. Secondly, does this mean that more and more automakers will source local software designed for specific markets? What is the effect of a fragmented market on innovation and economies of scale?

Although recent attention is focussed upon Huawei, Facebook, Google and others have been highly criticised for their lack of transparency and rigour in addressing abuse of social media and data. The UK’s recent White Paper or proposals suggest ways to control the excesses of social media.

It is in the interests of all parties, and including the security of the public, for all main players to agree on universal codes of conduct, robust policing and an internationally proficient arbitration system to address disputes. The current trade war and standoff cannot continue. Let’s hope the words of Winston Churchill are heeded whereby “To jaw-jaw is always better than to war-war.”


Julian Wilkins

Postscript: This week cannot go by without paying tribute to three times F1 World Champion Niki Lauda. I remember his near-death accident at the Old Nurburgring circuit during the 1976 German Grand Prix. I recall listening for the next news bulletin about Niki’s recovery. His almost messianic return to GP later in the season and the down to the wire joust for the Championship against the glamorous Brit James Hunt gripped me and millions of others. Although we wanted local boy Hunt to win the World Championship I could not help be in awe of Lauda’s grit, skill and bravery. We live in an age where too often excuses are made why people don’t succeed - if there was an example of the will of the individual overcoming all odds then Lauda’s story has to be one of the greats. RIP Niki Lauda (1949-2019).

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