The race to 5G in China and the European Union: an analysis of Huawei and Nokia's innovation policies

In 2019, the US ban of Huawei has put the spotlight on the development of 5G and the race in which world powers have entered to deploy this new technology in order to get a first-mover advantage. 5G is expected to bring significant economic gains and is expected to deliver more than $12 trillion worth of goods and services by 2035. In this competitive environment, Huawei and Nokia have entered into a strategic rivalry to deploy their 5G networks equipment on global markets. Both companies have developed offensive innovation policies to lead the industry through the elaboration of their own standards. Moreover, the rise of China and the international expansion of its national champions have increased the pressure on the country and the deployment of 5G has fallen in the middle of growing tensions between the US and China. In this thesis, we will explore the innovation policies of Nokia and Huawei to understand how the Chinese firm was able become the leading company in that sector. We will also analyse the role of the Chinese industrial policy on Huawei's innovation capabilities. The thesis is divided into two parts. The first part will review the existing literature about the evolution of the EU-China relation. It will also detail both powers' innovation strategies and explain the full benefits that 5G will deliver to the society. In the second part, we will explore the state of the global 5G deployment. Then, we will analyse Huawei and Nokia's innovation policies as well as the degree in which their countries intervene in their developments. By the end of the thesis, we will prove that the Chinese Communist Party played a strategic and significant role in the deployment of Huawei, domestically and internationally. By protecting its internal market and allowing Huawei to benefit from foreign technological spillovers, the Chinese firm was able to spend massive sums of money in the development of its R&D units. As Chinese firms are entering global rankings due to their massive size acquired on their domestic markets, Western countries should expect a growing number of Chinese firms to go global in the next years. Looking at the Chinese industrial policy, it is sure that Huawei won't be a marginal success story and that Chinese firms are now ready to enter foreign markets and compete with established multinationals.