How Huawei’s Localization in North Africa Delivered Mixed Returns

Preface

China Local/Global

China Local/Global

China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. 

With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular.

Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.

Evan A. Feigenbaum

Vice President for Studies, Carnegie Endowment for International Peace

Summary

Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa.

Tin Hinane El Kadi

Tin Hinane El Kadi is a political economy researcher. She is an associate fellow in the Middle East and North Africa department at Chatham House in London and the co-founder of the Institute for Social Science Research on Algeria. She is currently engaged in doctoral studies at the London School of Economics and Political Science. Her research focuses on the political economy of development, digital industrial policy, the knowledge economy, and China’s relations with the Middle East and North Africa.

The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure.

Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa.

Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students.

However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading.

North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.

Introduction

China has rapidly expanded its global digital footprint. In the country’s thriving domestic digital economy, Chinese information and communications technology (ICT) firms provide services to the highest number of internet users worldwide, estimated at around 1 billion people.1 Since the turn of the century, these firms have also expanded their global presence, growing their market share in both construction and services, including by building the backbone infrastructure used by billions of internet users around the world.2

China has been an active player in North Africa since the 1950s, when the newly established People’s Republic of China supported liberation movements across the region.3 Chinese ICT firms now stand on the cusp of becoming even more important actors through the Digital Silk Road, the digital component of the Belt and Road Initiative (BRI), Beijing’s multibillion-dollar plan to enhance its connectivity and boost trade with partner countries and regions.

The Digital Silk Road entails bringing advanced digital infrastructure to BRI countries, including technologies like fiber-optic cables, data centers, 5G networks, e-commerce platforms, artificial intelligence and cloud computing services, and the digital architecture that powers and undergirds smart cities.4 The Digital Silk Road aims to build what Beijing calls “a community with a shared future in cyberspace.”5 The announcement of this initiative in 2015 has led to a hodgepodge of follow-on government announcements, public and private funding vehicles, and various business deals.

Much of the policy debate about the internationalization of Chinese digital companies focuses on the potential risks of adopting Chinese technologies rather than on understanding why and how Chinese firms have succeeded in emerging markets in the first place. Many observers, particularly ones in the United States and Europe, presume that an all-powerful Chinese digital and ICT industrial complex smoothly grafts its uniquely “Chinese” internet model onto poorer nations and convinces them to adopt it by financing such endeavors with Chinese loans.6 An emerging body of empirically grounded studies has deconstructed this narrative and pointed out how it marginalizes the local agency of China’s partners.7 Far from imposing its own internet model on other developing countries, China instead seems to support nationally rooted visions of digital development.

This paper focuses on the Chinese tech champion Huawei’s market entry and business strategies in Algeria and Egypt to show that accommodating local development priorities is central to the firm’s success in globalizing its business. The Shenzhen-headquartered tech giant has responded favorably to Algeria’s and Egypt’s efforts to leverage foreign companies so as to help diversify and move to higher-productivity and technology-intensive economic activities. For example, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market.8 Huawei also launched an OpenLab, with the aim of conducting research and development (R&D) in Egypt, and established partnerships with numerous universities in the region to train local students.9

To be sure, Huawei is not offering charitable development deals. The tech firm has set about dominating the Algerian and Egyptian ICT equipment manufacturing market by purposefully linking the growth of its operations to the developmental needs of these two host countries. This has allowed the firm to strengthen its political capital in both Algiers and Cairo and expand its market share in the two countries. Yet Huawei’s localization in North Africa was not accompanied by meaningful opportunities for technological upgrading.

North Africa is an especially interesting case study of Chinese localization strategies. North African countries’ relations with China are rooted in a shared history of suffering from colonial domination and strategic ties that go back to the rule of former Chinese leader Mao Zedong. More recently, the BRI has bolstered these ties because North Africa is a significant point of connection for maritime logistics between Africa, Asia, and Europe. Different North African countries have varying political economies, but they all share middle-income status. They also have in common growing numbers of tech-savvy young people, relatively high rates of internet and mobile penetration, and proximity to the European Union (EU)’s market.10 All of these factors have made North Africa a uniquely positioned strategic hub for the BRI and the Digital Silk Road.

Chinese policy documents explicitly acknowledge the importance of the region. For example, China’s Thirteenth Five-Year Plan (2016–2020) states that Beijing aims to “develop an online Silk Road with the Arab countries and others” through high-speed fiber-optic networks.11 In recent years, the region became host to several flagship Digital Silk Road infrastructure projects, including data centers and smart cities built by Chinese firms.

This paper draws on in-country interviews in Algeria and Egypt between September 2021 and February 2022. In both countries, interviewees included Huawei’s Chinese and local employees, subcontractors, customers, students, ICT policymakers in the Algerian and Egyptian governments, other government officials in both countries, and experts and researchers. The paper showcases how Chinese digital firms operate on the ground, and it captures local perceptions of Huawei’s localization strategy. It was not possible to access several relevant documents, which are not publicly disclosed for reasons ranging from commercial secrecy to national security, so primary interviews provided the backbone for the paper’s empirical findings.

The paper is divided into four main parts and a conclusion. First, it offers an overview of China’s economic relations with North Africa with an emphasis on the Digital Silk Road. Second, it turns to Huawei’s path to internationalization. Third, it explores the various ways in which the company has accommodated partner countries’ development impulses, local demands for job creation, training, and technological upgrading. The fourth section discusses and contrasts these findings with other studies in other developing countries. The paper concludes with some lessons for North African governments drawn from China’s own experience promoting its tech champions and the promise of greater regional integration to better support local development needs.

China’s Economic Footprint in North Africa

Economic ties between China and North Africa can be traced to the days of the pharaohs. In the aftermath of independence from European powers in the 1950s and 1960s, four North African states—Algeria, Egypt, Morocco, and Tunisia—established diplomatic ties with China, whose Communist-led regime had actively backed liberation movements across the region.12

However, it was only in the early 2000s that trade between China and North Africa started to increase significantly, as China became a leading exporter to all North African countries.13

Between 2004 and 2014, trade volumes between China and the region grew by 20 percent annually on average, rising from $4.9 billion to $28.1 billion.14 As of 2020, total trade volumes hit $33 billion,15 although the EU remained by far North Africa’s largest trading partner, with total trade volumes surpassing $124 billion the same year.16

The Arab Spring adversely affected Chinese–North African economic relations. Egyptian-Chinese trade experienced a downturn following the 2011 Egyptian revolution before rebounding in 2014 after the coup that brought President Abdel Fattah el-Sisi to power. Aside from the Arab Spring, the decline in global commodity prices after 2014 substantially reduced the total value of North African exports to China. The region’s imports from China grew markedly in the 2010s, peaking in 2015, though the figures were still higher at the decade’s end than they were at the start (see figure 1).

While China’s trade relations with Gulf countries are characterized by a trade surplus in favor of Gulf states, North African countries all register significant trade deficits with China. In 2020, for example, Algeria imported around $5.6 billion in goods from China, while its exports did not exceed $1 billion.17 The same year Egypt imported over $13.6 billion in goods from China but sold as little as $905.9 million in return.18 This puts Egypt’s trade deficit with China at over $12 billion for 2020 alone.

The composition of trade between China and North African countries also reproduces patterns of unequal exchange. Finished manufactured goods like automobiles, electronics, and garments make up the lion’s share of Chinese exports to North Africa.19 At the same time, oil, minerals, and unprocessed agricultural products constitute the bulk of North African exports to China. Energy resources dominate Chinese imports from Algeria, Egypt, and Libya, and minerals and agricultural goods are the main exports that Morocco and Tunisia ship to China.20 With the rising demand for foreign food in China, agricultural exports from North Africa have grown in importance in recent years. Notably, Egypt became China’s top supplier of oranges in 2019.21

After Beijing formulated its “going out” strategy in the early 2000s, the presence of Chinese multinational corporations in North Africa increased gradually. However, China remains a relatively small investor in the region in comparative terms. In 2019, total Chinese foreign direct investment (FDI) stock in North Africa amounted to just $3.5 billion, representing a bit less than 8 percent of total Chinese FDI stock in Africa and a negligible 0.15 percent of Chinese FDI stock worldwide.22

In spite of these statistics, China is often described as a major investor in North Africa. Major infrastructure projects such as Algeria’s East-West Highway connecting Tunisia to Morocco, Algiers’ new airport, and the new Great Mosque of Algiers are often considered Chinese investments. Yet these are, in fact, juicy turnkey contracts that the Algerian government has directed to Chinese construction firms, which tend to provide cheaper services than their Western competitors. Merely because Chinese firms are involved in building infrastructure does not mean that they are themselves investing in these projects.23 Indeed, between 2009 and 2019, Algeria has become one of the most important markets in Africa for lucrative construction projects after granting an estimated $70 billion in contracts to Chinese firms (see figure 2).24 In any given year, capital inflows from Chinese FDI are much smaller than the outflows generated by turnkey contracts attributed to Chinese construction firms. For instance, in 2019 China’s FDI stock in Algeria amounted to $1.7 billion, while the value of contracts granted to Chinese firms in the country reached $6.3 billion.25

Since the launch of the BRI in 2013, Beijing has shown greater interest in North Africa, a development that has in turn signaled a qualitative shift in Beijing’s bilateral relationships in the region. North Africa holds a strategic position in China’s BRI because of its location, lying at the geographic crossroads connecting Asia, Africa, and Europe through Egypt’s Suez Canal. All five North African countries have signed memorandums of understanding to join the BRI, and the region is home to several notable BRI projects.26

China’s 2016 Arab Policy Paper, issued by the Chinese Ministry of Foreign Affairs a few days before President Xi Jinping’s tour of the region, announced a new era in the Asian giant’s engagement with the region. The document emphasizes China’s willingness to coordinate development strategies with Arab states according to their own needs and to promote cooperation in science and technology, research and education, and economic sectors such as telecommunications, renewable energy, and finance.27

In particular, China’s commitment to boosting technological cooperation with the region through the BRI has ushered in a new era of diplomatic ties. Beijing has shown more willingness to promote technology sharing by establishing a collaborative network of integrated technology transfers, encouraging exchanges between young scientific talent, creating joint research and scientific facilities, and encouraging Chinese technology firms to expand their business activities and establish local R&D centers in the region.28

The Digital Silk Road and North Africa

The digital space is one of the most notable aspects of recent China–North African partnerships, not least because governments in the region are so eager to upgrade their backbone network infrastructure and accelerate the digitalization of their economies. The 2015 announcement of the Digital Silk Road; China’s “Internet Plus Strategy,” proposed by Premier Li Keqiang in his March 2015 Government Work Report, which aimed at linking China’s traditional industries to connected services; and the Chinese Foreign Ministry’s 2016 Arab Policy Paper have shaped China’s actions in North Africa.29 The confluence of these three strategies led to a surge in new partnerships that paired North African governments and Chinese tech firms—from e-commerce giants to surveillance equipment providers.

As a result, North Africa has become home to several Digital Silk Road projects. For instance, in 2018, the China Satellite Navigation Office and the Arab Information and Communication Technology Organization launched the BeiDou Navigation Satellite System’s first facility abroad in Tunisia.30 The center organizes joint research, testing activities, and workshops that emphasize the strengths of BeiDou and the Chinese products that tap into the system. It aims to provide training on satellite navigation to local scientists and spur growth in the digital economy across the broader region. Beijing also offers scholarships to students from North Africa who specialize in navigation systems.

Another flagship Digital Silk Road endeavor is the Tangier Tech City, a Chinese-built smart city in northern Morocco. Initially, this mega-project, signed in March 2017, was expected to create 100,000 jobs, provide housing for 300,000 people, and consolidate Morocco’s trade relationship with China.31 On completion, the city was set to constitute China’s most prominent industrial and technological hub in Africa, with around 200 Chinese companies specializing in high-value-added sectors such as aeronautics, automobiles, and ICT innovations.32 However, a dispute between the Chinese group Haite and Moroccan authorities over the “ownership of the city” led the Chinese constructor to leave the project in 2018.33 Ultimately, the China Road and Bridge Corporation took over from Haite, but the project has been significantly downsized.34

Led by Chinese tech giants, the Digital Silk Road offers digital infrastructure to middle-income countries at competitive prices.35 Viewed through the lens of developing countries, the Digital Silk Road is an opportunity to bridge the digital divide and bolster indigenous efforts to build digital economies. North African economies are concentrated in low-value-added sectors and suffer from sluggish growth. High chronic youth unemployment, estimated at 30 percent as of 2017, is a distinctive feature of the Middle East and North Africa.36 Remarkably, 40 percent of the region’s university graduates were unemployed, according to a 2017 report by the World Economic Forum.37 More than a decade after the mass revolt against autocratic rule and lack of economic opportunities, no meaningful change has materialized in the region.

To generate long-term growth and create high-quality jobs for these millions of unemployed workers, North African economies need to undergo a structural transformation involving a transition from low-productivity, labor-intensive economic activities to high-productivity, technology-intensive activities that require great skill. Recognizing the potential of the digital economy to help this transition, governments across the region have adopted distinctive ICT strategies designed to boost internet connectivity, upgrade workers’ skills, and build thriving knowledge economies.

Both Algeria and Egypt have unveiled national ICT strategies. Egypt’s ICT 2030 plan prioritizes developing ICT infrastructure, fostering digital inclusion, building domestic capacity, and encouraging innovation.38 Egypt has positioned itself as a regional leader in exporting information technology services and is home to a vibrant start-up scene. In 2017, Egypt passed an investment law that promotes inbound FDI by easing barriers to entry and supporting foreign multinational firms’ localization efforts.39 Although Algeria was slower to start its digital transformation, it has made significant strides in terms of ICT infrastructure, with bandwidth capacity increasing more than twenty times since 2014.40 Through the creation of the Ministry of Microenterprise, Knowledge Economy, and Startups in 2020, the government is attempting to shift Algeria’s hydrocarbon-dependent economy to a new knowledge-based model.

As governments across North Africa adopt digital transformation agendas, Chinese firms have formulated strategies to closely align with them. Huawei has made significant inroads in the region’s telecommunications industry due to its capacity to provide high-quality network equipment at relatively affordable prices. In addition, Huawei has been training local employees, subcontractors, and students to an unmatched level compared with other major global ICT original equipment manufacturers (OEMs) like Cisco, Ericsson, Nokia, and the Chinese partially state-owned firm ZTE.41 Furthermore, Huawei has localized some high-value-added activities in North Africa, including by opening manufacturing plants and conducting R&D.

How Huawei Went Global

Founded in Shenzhen in 1987 by Ren Zhengfei, who used to serve in the People’s Liberation Army, Huawei has grown exponentially since its modest beginnings reselling private branch exchange switches imported from Hong Kong.42 Huawei became the world’s leading OEM by moving into new markets as it began constructing telecommunications networks for phone carriers, making mobile devices for consumers, and providing a myriad of cloud, big data, and other services to other firms. In 2020, Huawei had more than 197,000 employees, operated in 170 countries and regions, and estimated that its equipment served over 3 billion people worldwide.43

Huawei’s push to become a more international company is closely tied to China’s economic reforms. In the late 1990s, China embarked on a new stage of integration into the global economy, expanding from attracting inbound FDI to “going out” by encouraging its own enterprises to venture overseas. A decade earlier, China’s policy of opening its market to overseas firms had resulted in foreign dominance of several industries and market saturation.44 In part, it was Huawei’s desire to escape fierce competition at home that drove it to seek new markets abroad.45

Huawei’s push to internationalize its operations started by expanding into low- and middle-income economies before seeking to enter high-income markets.46 This approach mirrors the company’s domestic expansion strategy within China of “using the countryside to surround the cities.”47 The rising demand from developing countries to expand their network capacities (in terms of geographic coverage and the number of users, for instance) and upgrade network equipment (shifting from 3G to 4G and eventually to 5G), combined with the competitive prices of Huawei’s products, meant that the firm soon began generating more of its revenue from outside China than domestically (see table 1).48 In 2012, Huawei overtook the Swedish-headquartered company Ericsson in revenue to become the world’s largest telecommunications equipment vendor.49


























Table 1. Huawei’s Overseas Revenue
Year Total Revenue (Billions of Yuan) % of Revenue From Overseas Sales
2002 18 N/A
2003 22 27.4
2004 31 40.9
2005 48 58
2006 66.7 65
2007 94 72
2008 125.2 75
2009 149 60.4
2010 185 66
2011 204 67.8
2012 220 66.6
2013 239 64.8
2014 288.2 62.2
2015 395 45.7
2016 521.6 59
2017 603.6 71
2018 721.2 48.4
2019 858.8 41
2020 891.4 34.4
SOURCE: Compiled by the author based on figures from Huawei’s annual reports. See, for example, Huawei, “2020 Annual Report,” Huawei, 2021, https://www.huawei.com/en/annual-report/2020.

Huawei’s spectacular internationalization, including in North Africa, can be attributed to several factors. First, the Shenzhen-based firm produces high-quality equipment that is cheaper than its competitors’ wares. Some analysts have estimated that Huawei’s equipment is about 30 percent cheaper than that of its competitors, but estimations vary widely depending on the type of technology.50 Huawei’s remarkable push to internationalize, including its price advantage, can be traced to the financial edge it derives from the Chinese state and the company’s commitment to R&D. Huawei and other Chinese tech firms venturing abroad benefit from access to large loans provided by China’s state-backed policy banks, specifically the China Development Bank (CDB) and the Export-Import Bank of China (or China Exim Bank). For instance, Huawei received one CDB loan to the tune of $10 billion in 2004 and then received another for twice that amount in 2009.51 Credit from the CDB allowed Huawei to offer what is termed vendor financing, which is providing the financial backing for customers to make major purchases.52

Loans from the CDB and the China Exim Bank were a huge boon for Huawei. With such financial backing, the firm could provide more favorable financing terms to customers than its Western competitors. As one employee of the French-American telecommunications firm Alcatel-Lucent put it, “We won’t die at the hands of Huawei; if we die, it will be at the hands of China Development Bank.”53 In Africa alone, the China-Africa Research Initiative of Johns Hopkins University’s School of Advanced International Studies identified more than seventy loan-backed projects by Chinese financiers between 2000 and 2019 involving Huawei contracts.54

Second, considerable investments in R&D are a cornerstone of Huawei’s global success. The Chinese firm reinvests a far greater share of its profits back into production and R&D compared to U.S. firms like Cisco, which have grown increasingly financialized.55 This has been especially the case since the 2000s, when Beijing adopted a handful of policies to boost “indigenous innovation” in strategic areas.56 These policies reflected concerns in the Chinese Communist Party’s leadership that its low-value-added export path in the 1980s risked leaving China stuck indefinitely at the bottom of global value chains and vulnerable to the national security implications of foreign-controlled internet infrastructure.57 In response, new Chinese policies aimed squarely to support the emergence of competitive domestic actors by offering a wide range of incentives for local firms, both public and private, to enter the digital innovation fray. In this context, Huawei progressively ramped up its own R&D efforts and set out to overtake its global competitors.

Huawei’s R&D strategy has also evolved by virtue of its experience competing on the global stage. One turning point was a 2003 lawsuit Huawei faced when Cisco accused it of “systematic and wholesale infringement of Cisco’s intellectual property.”58 The lawsuit was settled in 2004 after Huawei agreed to modify its telecommunications equipment, among other steps. Following the lawsuit, Huawei adopted a more strategic approach to R&D and strove to boost its patents. The firm started spending an increasing share of its revenue on R&D and systematically patenting its innovations.59 For years, Huawei has poured a tenth or more of its annual revenues into R&D. In 2020 alone, its R&D spending reached a staggering 141.9 billion yuan (around $22.3 billion).60 Despite U.S. pressure under former president Donald Trump’s administration, Huawei increased its active patents by at least 17 percent to a total of more than 100,000 between the end of 2019 and the end of 2020.61 As one of the firm’s executives boasted, Huawei has grown to become “one of the world’s largest patent holders.”62

Finally, a less-recognized factor behind Huawei’s success lies in the firm’s capacity to adjust to disparate cultural, political, economic, and institutional settings in different regions around the world. The tech giant has flourished in widely varying environments, from democratic Senegal to autocratic Cuba, from the United Kingdom’s (UK) liberalized telecommunications industry to Ethiopia’s state monopoly over telecommunications, and from the stable and prosperous EU to war-torn Afghanistan. Admittedly, Huawei’s operating environment in some of these locations is changing, with the UK government barring the firm from its 5G rollout. Nonetheless, these setbacks reflect geopolitical misgivings more than shortcomings in the firm’s technological and business capabilities.

Huawei’s bid to internationalize its operations has involved learning and making adjustments. Gaining local knowledge allowed the tech multinational to fine-tune its products on short notice to meet local customers’ evolving needs.63 For instance, attempting to capture more market share in the smartphone sector in Muslim-majority countries, one of Huawei’s popular smartphones came with a built-in Muslim prayer reminder function and an app for locating nearby mosques.64 In developing countries where the need for job creation, training, and technological upgrading is pressing, Huawei has emphasized knowledge transfer schemes by creating ICT academies, organizing tech competitions, and providing scholarships to outstanding students.

Huawei’s Localization in North Africa

Just a few hours after landing in Egypt in 2009, then Chinese premier Wen Jiabao visited Huawei’s training center in Cairo.65 Huawei had chosen the city as home to its second training center on the African continent in 2005 with an initial investment of $20 million. The company followed this move with an upgrade four years later, which involved moving the center to Cairo’s Smart Village, a cluster of all the relevant major ICT firms, universities, and public agencies. With North African countries striving to diversify their economies and move up industrial value chains, Huawei’s public relations team has put considerable emphasis on the firm’s role in contributing to the region’s digital transformation. Huawei collaborates closely with the Algerian and Egyptian governments on training programs, manufacturing ventures, and R&D initiatives. The firm’s foray into international competition has depended on its ability to adjust national development priorities and gain political capital with both government officials and ordinary people to advance its business interests.

The Algerian and Egyptian governments are devoting considerable resources to improving network equipment and encouraging the launch of new digital ventures.66 Egypt has witnessed an upsurge in internet penetration rates. Egypt’s rate was 57.3 percent as of January 2021, while Algeria’s rate reached about 60 percent by then.67 This growth in mobile broadband access is somewhat correlated with a surge in mobile phone subscriptions and an expansion in 3G and 4G network coverage. This progress shows up in the countries’ mobile penetration rates, which gauge the share of people who own a mobile phone. For Egypt, this metric stood at 92.7 percent in January 2021: the country’s three main mobile service operators are Etisalat, Orange, and Vodafone.68 In Algeria, which also boasts three main mobile service providers including Djezzy, Mobilis, and Ooredoo, the mobile penetration rate reached 105.8 percent in January 2021.69

These numbers indicate substantial growth, yet in comparative terms the region’s internet penetration remains just slightly above the world average, which is estimated to be 57 percent.70 This means that these countries still present significant growth opportunities. Other than sub-Saharan Africa, no region in the world has more room to improve its penetration of mobile services than the Middle East and North Africa.71 According to a report by a trade association for the mobile network industry, Middle Eastern and North African countries are likely to see subscriber numbers climb at a higher clip from 2017 to 2025 than any region besides sub-Saharan Africa.72 There will be a great deal of growth potential as 5G technologies are introduced. In Egypt, the National Telecom Regulatory Authority has started to allocate new frequencies to mobile operators, but in Algeria, the shift toward 5G has been slower.73

Huawei has arguably become the top network equipment provider in Egypt and Algeria alike.74 Measured by the size of its population, Egypt is the largest market in the Middle East or North Africa and the third-largest market in all of Africa.75 Egypt also was selected by Huawei to be home to its North African headquarters in Cairo in 1999.76 The company entered the Algerian market the same year by establishing a subsidiary called Huawei Telecom Algeria. Huawei employs an estimated 1,000 workers in Egypt and about half as many in Algeria, with about 70 percent of the staff made up of local employees and the remaining 30 percent consisting of Chinese and other foreign engineers.77

Because Huawei Algeria and Huawei Egypt are subsidiaries of the parent company, they do not have to publicly release financial data. Nonetheless, as Ran Li and Kee-Cheok Cheong have noted, their “performance can be inferred directly from periodic announcements the company issues and indirectly from viewing financial data . . . from the parent company’s annual reports.”78 Both the Algerian and Egyptian governments have granted major contracts to Huawei as part of their efforts to catch up in terms of building out their network infrastructure, e-governance platforms, and cloud data centers.

For instance, Huawei’s enterprise business signed, among other things, a contract with Sonatrach, Algeria’s state-owned oil company, to upgrade its digital systems by providing cloud services and big data applications.79 In Egypt, the state-owned Telecom Egypt (We) and Huawei inked a $200 million deal in 2018 with backing from Chinese financiers to support Telecom Egypt’s 4G network development.80 In both countries, Huawei has played a key role in the upgrading of 3G and 4G networks and will likely continue to do so with 5G, despite mounting pressures from the United States to ban the Chinese equipment manufacturer.81

Concurrently, Huawei has partnered with several local universities, research institutes, and firms to expand its footprint. The firm has built an image as a key development partner in the ICT sector, projecting its willingness to adjust to, and accommodate, local development needs. Relevant activities include providing various training programs in both Algeria and Egypt, opening a manufacturing plant abroad in Algeria, and establishing one of its few overseas OpenLabs in Egypt.

Localization Through Training in Algeria and Egypt

Interviewees in Algeria and Egypt referred to the central role that training plays in Huawei’s localization strategy. Similar to workers at its competitors, new Egyptian and Algerian employees at Huawei go through training programs when they are first hired.82 This training continues throughout their employment period, with mandatory tests undertaken at different stages of their careers. Huawei, like others, offers training to local subcontractors for installing, troubleshooting, and maintaining the equipment they sell to customers. Typically, OEMs utilize different subcontractors covering the various regions of a country where ICT infrastructure is being rolled out. They also provide training to customers on the use of purchased equipment.

But, unlike for other firms, Huawei’s enterprise business has been notably active in establishing cooperation agreements with local universities and in training students across North Africa. Huawei has forged two types of partnerships with North African universities: the Huawei Authorized Network Academy and the Huawei Authorized Information and Network Academy, both of which also operate in other regions. According to Huawei, the objective of these academies is to build capacity and help local economies spur digital transformation by connecting local talent to the ICT industry.83 Specifically, these academies aim to promote certifications in Huawei technologies among local university students in ICT-related subjects. These certifications attest that their holders are competent in using and maintaining the technologies of a specific manufacturer. Students then go on to find employment with mobile operators, equipment manufacturers, or other firms that use these technologies. Alternatively, some graduates join channel partners who sell and install equipment for customers such as governments and large corporations.84

In Algeria, Huawei has ramped up efforts to create ICT academies across the country in recent years. Through a partnership signed in 2021 with the Algerian Ministry of Higher Education and Scientific Research, Huawei launched multiple major local ICT labs within leading Algerian universities including the National Institute of Telecommunications and Information and Communication Technologies (in Algiers and Oran), the University of Saida, the University of Sciences and Technology Houari Boumediene (in Algiers), and the National School of Computer Science (in Algiers).85 These labs are equipped with high-performing computers and cutting-edge equipment for training students. Participating universities also have access to ICT courses taught by accredited Huawei instructors who train both students and future instructors. According to Huawei, it trains more than 3,000 young Algerians annually in various ICT-related fields.86

Likewise, in Egypt, Huawei launched ICT academies in 2013 to develop university infrastructure, train young Egyptian ICT talent, and increase employment opportunities for university graduates by facilitating university-industry linkages. In 2019, the firm signed a partnership with Egypt’s Ministry of Communications and Information Technology, Ministry of Manpower, and Ministry of Higher Education and Scientific Research to launch a local ICT Talent Bank, its flagship capacity-building program.87 The program is meant to create 100 Huawei academies in Egypt, train 200 instructors and 1,200 ICT engineers, and certify 4,000 people.88 Trainees are selected on a competitive basis from a dozen Egyptian universities, including Assiut University, Aswan University, and Suez University. According to Sun Luocheng, the chief executive officer of Huawei Egypt, the ICT Talent Bank aims to be a bridge connecting all players in Egypt’s digital ecosystem in response to Cairo’s push to promote a local knowledge economy as envisioned in the Egyptian government’s ICT 2030 agenda.89

To be sure, Huawei’s ICT academies primarily aim to outcompete other multinational players. Historically, the ICT sector has been dominated by Cisco certifications, which many ICT engineers consider the golden standard.90 Huawei has been actively trying to erode Cisco’s dominance of the certification market.91 Through its locally established ICT academies, the firm has created several incentives to boost the rate of students certified in Huawei technologies, not least by gifting pricey simulation equipment to local universities that succeed in achieving a substantial number of Huawei-certified students per year and by providing discounts on its certification fees, which the firm pays on behalf of students with vouchers. According to interviews with several engineers in Algeria and Egypt, fees for Cisco certifications run $200 to $600 compared to $100 to $500 for Huawei certifications.92 During the coronavirus pandemic, interviewees said that Huawei went as far as scraping all fees for anyone wishing to be certified by Huawei, while Cisco introduced a 50 percent discount.93 With the cost-free option now available, many Algerian and Egyptian students interviewed by the author opted for Huawei’s certifications instead of Cisco’s.

Additionally, Huawei has launched a Seeds for Future scholarship, which takes some of the brightest students from all over the world to Huawei’s headquarters in Shenzhen and offers them exposure to new technologies and immersion in Chinese culture. Huawei also organizes large-scale ICT competitions, including within and among North African countries. Algerian and Egyptian teams were among the winners of the global final of the 2019–2020 Huawei ICT competition.94

Huawei also works at building ties with channel partners that use Cisco equipment to incentivize them by reducing the cost of the training and certifications in Huawei’s technologies.95 This strategy has worked at promoting deeper Huawei penetration: in interviews, a few channel partners explained that they were previously selling Cisco technologies but that the market in Cisco equipment was saturated, so when Huawei offered them the opportunity to become their channel partners, they seized it.96

With more ICT engineers now trained to install, maintain, and troubleshoot Huawei technologies, and with more channel partners selling Huawei products, North African governments, operators, and firms now have yet another incentive to increase purchases of Huawei’s more affordably and attractively financed equipment.

Huawei’s Manufacturing Plant in Algiers

One of the most significant Digital Silk Road projects and compelling illustrations of Huawei’s localization strategy in North Africa is the firm’s smartphone factory in Algeria. Launched in 2019, this factory is the first of its kind in Africa and one of the few facilities worldwide located outside China itself. The plant is the result of a partnership between Huawei and an Algerian company called AFGO-Tech. The factory originally could crank out 15,000 mobile devices per month, though it later reportedly expanded its operations to produce 30,000 devices per month, according to an interview with an assembly line manager.97 The production unit employs around 140 Algerians, including twelve engineers trained in Shenzhen in Huawei’s production techniques and procedures.98

The decision to set up a factory in Algiers came after lengthy negotiations between Huawei and the Algerian government. Algeria, whose state coffers depend greatly on hydrocarbon exports, was hit hard by the 2014 crash in commodity prices.99 This led the government to reduce imports and adopt an import-substitution strategy to save foreign currency. In 2018, the Algerian government banned the import of 900 products, including cell phones.100 In its quest to diversify its national economy and increase local production of value-added goods, the government introduced a series of new industrial policies. Most notably, the Algerian government engaged in negotiations with several cell phone manufacturers to localize production. The South Korean firm Samsung was the first to respond to this call. Samsung announced the launch of its first smartphone assembly plant in the country in December 2017 through its Algerian subsidiary Samsung Algeria and its local distribution partner Timecom. Samsung’s Algerian factory has a production capacity of 1.5 million units per year and is estimated to create 400 direct jobs and hundreds of other indirect ones.101

This implicit Algerian government pressure worked: fearing the loss of market share to Samsung, Huawei responded to the government’s call to localize production. It announced that it would open its first African factory in Algiers in January 2019.102 At the factory’s launch ceremony, Huawei representatives stressed that the plant, situated in Oued Smar, an emerging industrial hub in the eastern outskirts of Algiers, would be equipped with advanced technologies and, most importantly, that it would involve the transfer to Algeria of cutting-edge technologies and manufacturing processes. During its first months of operation, Algerian employees were put under the supervision of Chinese experts dispatched from the firm’s various factories to guarantee compliance with Huawei’s standards. The plant started by assembling a single model, the Y7 Prime smartphone, the product that Huawei judged to be best suited to consumer preferences in the Algerian market.103

Like other Huawei plants, the Oued Smar factory plays a strategic role in the company’s internationalization. It ensures continuous access to Algeria’s promising consumer market of 43.9 million through a localized supply chain that combines Chinese inputs into the assembly of the final product in Algeria.104 In December 2018, prior to the factory’s launch, Huawei’s market share in Algeria’s phone market was only about 6 percent. By August 2020, it had doubled to peak at 12.3 percent (though it has since slightly declined), outcompeting Condor, a homegrown Algerian cell phone brand.105

From the Algerian side, concerns remain over the factory’s low rate of integration of locally produced components. Interviewed experts expressed doubts that the assembly line’s reliance on imported semi-knocked-down (SKD) and completely-knocked-down (CKD) kits that are manufactured in China and then exported to Algeria for the final stages of assembly would generate meaningful know-how in value-added manufacturing.106 Algerian authorities described the issue as “fictitious production” and “disguised import.”107 In January 2021, the factory’s activities were suspended due to the government’s ban on the import of CKD and SKD kits, and its workers, who were employed on AFGO-Tech contracts, were laid off for an undetermined period.108

Huawei’s OpenLab in Cairo

Another of the firm’s flagship ICT ventures in North Africa is its OpenLab in Cairo. Launched in 2017, the lab was, at the time, one of just eight worldwide and only the second in Africa, following the opening of a similar facility in Johannesburg.109 Through this lab, Huawei targets enterprise customers and aims to offer a platform for innovation in collaboration with local partners. Situated in the Smart Village office complex in Cairo and covering an area of 400 square meters, this OpenLab serves as a market-oriented R&D facility.110

The OpenLab in Cairo aims to create synergies between customers and an alliance of local industry partners to develop new applications and services for the Egyptian and North African markets. It also reflects Huawei’s ambitions to enhance its understanding of the local characteristics of the North African market, a necessary step to create software and applications that fit local needs. The OpenLab operates in coordination with four existing Huawei centers in Cairo.111

The OpenLab was announced a few months after the Egyptian government put forward its ambitious ICT 2030 vision, with the goal of ushering in a new era in the country’s transition to a digital economy. The vision emphasizes Egypt’s aim to “build and foster an ecosystem that encourages entrepreneurship and spurs creativity.”112 It also endeavors “to promote research and development, innovation, and entrepreneurship in the field of ICT in order to drive sector growth . . . and position Egypt as a regional innovation hub.”113

The choice of Egypt as the location for Huawei’s second OpenLab in Africa was a response to two central goals of Cairo’s digital industrial policy: the development of local content in Egypt in key ICT applications and the promotion of an export-oriented Egyptian ICT sector, notably in terms of ICT-enabled services.114 Egypt was able to leverage the strengths of its sizable population of over 100 million and its regionally well-ranked higher education system, two local advantages that Huawei executives have specifically highlighted as factors in the company’s decisionmaking process on the Cairo facility.115

But despite much fanfare, the lab is by no means equivalent to one of Huawei’s fully fledged domestic R&D centers, where the firm’s most innovative research is conducted. According to an official Huawei statement, the Cairo lab focuses on nontechnological R&D—in other words, looking at developing applications in the areas of public safety, smart city management, smart government, and smart education.116 There appear to be no plans for the center to focus on technology-centered R&D, such as artificial intelligence–enabled applications, the Internet of Things, sensors, and other high-tech applications. While Huawei has established R&D facilities in more advanced economies, including one launched in France in 2020, the firm has not yet included African countries in such specialized cooperative ventures.117

In this way, Huawei has localized in Egypt, but it has done so within a global framework that has so far kept its advanced R&D work in China and countries with stringent intellectual property regulations. As a profit-seeking entity, the Chinese firm has no incentive to share its cutting-edge innovations in ways that would weaken its technological, and hence commercial, advantage.118 Thus, in its training, manufacturing, and R&D activities in both Egypt and Algeria, Huawei’s localization strategy has focused on an appealing public relations campaign emphasizing the firm’s support of national development priorities while relying on technological retention so as to ensure its continued dominance over the North African market.

Localization Through Accommodation

Huawei’s strategies and approaches in North Africa show that, far from imposing a one-size-fits-all blueprint on other countries, Chinese tech players do adapt and adjust their engagement strategies depending on local development agendas. Flexibility, customization, and services tailored to local demand have been a cornerstone of Huawei’s localization strategies.

Large-scale training, corporate social responsibility activities, and, more recently, localized manufacturing and R&D have been essential to Huawei’s considerable commercial dynamism in North Africa. This localization strategy enabled Huawei to build strong ties with a myriad of actors in Egypt’s and Algeria’s ICT ecosystems, while portraying itself as an active partner of the two governments’ transitions toward digital economies. Huawei’s embeddedness in North Africa helped it to work smoothly with policymakers and powerholders, something that would not have been possible without responding to the localization initiatives the two governments pressed on it.

An important question both governments need to ask is the true extent to which Huawei is contributing to Algerian and Egyptian technological upgrading. In an empirical study of Huawei’s role in human capital development in Nigeria, Motolani Agbebi found that the Chinese firm’s training efforts have helped upskill local employees, suppliers, and customers, while the company has also organized ICT competitions and provided scholarships to local students.119 By contrast, Henry Tugendhat found in another study that looked at Huawei’s training centers in Nigeria and Kenya that Huawei’s presence fell short of featuring tangible enough knowledge transfers and technological upgrading. He argued that international equipment vendors, including Huawei, limit by design the scope of the knowledge they are willing to share with local employees and actors.120

For all of Algeria’s and Egypt’s ambitions, this study’s findings in both cases corroborate this latter insight. Huawei’s localization of training to its Algerian and Egyptian subcontractors could in theory generate significant knowledge spillovers, but Algerian subcontractors revealed to the author in interviews that training was limited to the installation and maintenance of Huawei products.121 The purpose of the training was simply to ensure smooth operations on Huawei’s equipment. Likewise, the firm’s employees in both Egypt and Algeria reported that training focused on mastering Huawei products and services and that high-level positions within the firm remained off-limits to locals. Even in the manufacturing and R&D spheres, Huawei did respond to the government’s calls for localizing high-value-added activities but kept a tight rein on its intellectual property.

The long-term effects of Chinese digital projects in North Africa will depend on several factors, including the degree to which Algiers and Cairo foster more institutional capacity, grow their consumer markets through other macroeconomic and microeconomic policies, and promote human capital development. Ultimately, China’s digital presence in North Africa operates within the context of local institutions and infrastructures, preexisting ecosystems, and local social preferences.

Conclusion

The BRI and the Digital Silk Road have led to a deepening of relationships between China and North African countries, with increased Chinese projects in local manufacturing and the tech sector. The entry of leading tech firms into North Africa, including major Chinese firms, has prompted lofty expectations among governments across the region seeking to foster booming digital economies.122

However, although the Digital Silk Road meets the demands of North African governments for infrastructure expansion and skills upgrading, local policymakers should scrutinize the degree to which the much-advertised development initiatives by Chinese firms ultimately meet local aspirations and expectations. Above all, the governments need to press for meaningful technology transfer, since Chinese and other foreign players will invariably try to preserve their proprietary knowledge and technological edge.

This is especially important because Chinese firms now have a commanding position in the North African ICT scene, making it harder for domestic competitors to make inroads.123 For instance, Algeria’s local champion firm, Condor, lost some of its market share in mobile phones to Huawei after the launch of the Chinese firm’s local assembly plant. Localization by Chinese players has brought mixed results for North African governments—it promotes local employment and training to some extent but comes at the expense of local firms hoping to find their own opportunities to grow. That is not all: when Chinese tech players build local digital infrastructure, they retain control of lucrative digital data. With access to such information, Chinese digital giants can further deepen their understanding of local markets and more effectively hold domestic North African players at bay.

For North African decisionmakers to succeed in fostering thriving digital economies that would help their citizens find jobs and improve their standards of living, they must learn from China’s example by ensuring that their own potential tech champions have sufficient financial resources and buffers from fierce competition to succeed.124

One way for North African states to maximize the economic gains from Chinese investments is through greater regional cooperation. By promoting regional integration, Algeria, Egypt, and their neighbors can increase their bargaining power with Chinese multinational firms. Moving beyond fragmented bilateral commercial negotiations with China would help level the playing field for all North African governments as they deal with Huawei and other companies whose investments and know-how they hope to attract and harness.

Notes

1 Lai Lin Thomala, “Number of Internet Users in China 2008–2021,” Statista, https://www.statista.com/statistics/265140/number-of-internet-users-in-china.

2 Elisa Oreglia, “Africa’s Many Chinas,” University of California at Berkeley, 2012, http://www.ercolino.eu/docs/Oreglia_Proj_AfricasManyChinas.pdf; and Iginio Gagliardone, China, Africa, and the Future of the Internet: New Media, New Politics, first edition (London: Zed Books, 2019).

3 Thierry Pairault, “La Chine au Maghreb : de l’Esprit de Bandung à l’Esprit du Capitalisme” [China in the Maghreb: From the spirit of Bandung to the spirit of capitalism], Revue de la Régulation: Capitalisme, Institutions, Pouvoirs [Review of Regulation: Capitalism, Institutions, Powers] no. 21 (June 2017), https://doi.org/10.4000/regulation.12230.

4 Hong Shen, “Across the Great (Fire) Wall: China and the Global Internet,” University of Illinois at Urbana-Champaign (PhD dissertation), 2017, 299, https://www.ideals.illinois.edu/handle/2142/97589.

5 He Wei, “Xi: Internet a Joint Global Responsibility,” World Internet Conference, October 21, 2019, https://www.wuzhenwic.org/2019-10/21/c_562803.htm; and Elisa Oreglia, Hongyi Ren, and Chia-Chi Liao, “The Puzzle of the Digital Silk Road,” in Digital Silk Road in Central Asia: Present and Future, ed. Nargis Kassenova and Brendan Duprey (Cambridge, MA: Harvard University Davis Center for Russian and Eurasian Studies, 2021), 136, https://daviscenter.fas.harvard.edu/research-initiatives/program-central-asia/digital-silk-road-central-asia-present-and-future.

6 Jonathan E. Hillman, The Digital Silk Road: China’s Quest to Wire the World and Win the Future (New York: Harper Business, 2021).

7 Gagliardone, China, Africa, and the Future of the Internet.

8 “L’Algérie Abrite la Toute Première Usine Africaine de Huawei, Opérationnelle Depuis le 22 Janvier 2019” [Algeria is home to Huawei’s very first African factory, operational since January 22, 2019], Ecofin Agency, January 28, 2019, https://www.agenceecofin.com/investissement/2801-63550-l-algerie-abrite-la-toute-premiere-usine-africaine-de-huawei-operationnelle-depuis-le-22-janvier-2019; and “Algeria: Huawei Launched Its Oued Smart Phone Assembly Plant on January 22, 2019,” Ecofin Agency, January 28, 2019, https://www.ecofinagency.com/telecom/2801-39573-algeria-huawei-launched-its-oued-smar-phone-assembly-plant-on-january-22-2019.

9 Huawei, “Huawei Announces New OpenLab in Cairo to Build ICT Ecosystem in Northern Africa,” Huawei (press release), 2017, https://www.huawei.com/en/news/2017/12/Huawei-New-OpenLab-Cairo.

10 World Bank, “Individuals Using the Internet (% of Population),” World Bank, 2019, https://data.worldbank.org/indicator/IT.NET.USER.ZS.

11 Central Committee of the Communist Party of China, “The 13th Five-Year Plan for Economic and Social Development of the People’s Republic of China 2016–2020,” 2016, https://en.ndrc.gov.cn/policies/202105/P020210527785800103339.pdf.

12 In the aftermath of independence, no relations were established between the Communist-led People’s Republic of China and Libya, as Tripoli continued to recognize the Republic of China (Taiwan) as the legitimate Chinese government until 1978.

13 “Egypt, Arab Rep. 2017 Import Partner Share,” World Integrated Trade Solutions, 2017, https://wits.worldbank.org/CountryProfile/en/Country/EGY/Year/2017/TradeFlow/Import; “Algeria 2017 Import Partner Share,” World Integrated Trade Solutions, 2017, https://wits.worldbank.org/CountryProfile/en/Country/DZA/Year/2017/TradeFlow/Import; “Libya 2017 Import Partner Share,” World Integrated Trade Solutions, 2017, https://wits.worldbank.org/CountryProfile/en/Country/LBY/Year/2017/TradeFlow/Import; “Tunisia 2018 Import Partner Share,” World Integrated Trade Solutions, 2018, https://wits.worldbank.org/CountryProfile/en/Country/TUN/Year/2018/TradeFlow/Import; and “Morocco 2017 Import Partner Share,” World Integrated Trade Solutions, 2017, https://wits.worldbank.org/CountryProfile/en/Country/MAR/Year/2017/TradeFlow/Import.

14 “China-Africa Trade,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2020, http://www.sais-cari.org/data-china-africa-trade.

15 “What Does Egypt Export to China? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/egy/chn/show/2019/; “What Does Algeria Export to China? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/dza/chn/show/2019/; “What Does Morocco Export to China? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/mar/chn/show/2019/; “What Does Tunisia Export to China? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/tun/chn/show/2019/; and “What Does Libya Export to China? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/lby/chn/show/2019/.

16 “Algeria: Trade Picture,” European Commission, June 9, 2021, https://ec.europa.eu/trade/policy/countries-and-regions/countries/algeria/; “Egypt: Trade Picture,” European Commission, June 14, 2021, https://ec.europa.eu/trade/policy/countries-and-regions/countries/egypt/; “Libya: Trade Picture,” European Commission, May 11, 2021, https://ec.europa.eu/trade/policy/countries-and-regions/countries/libya/; “Tunisia: Trade Picture,” European Commission, June 9, 2021, https://ec.europa.eu/trade/policy/countries-and-regions/countries/tunisia/; and “Morocco: Trade Picture,” European Commission, June 24, 2021, https://ec.europa.eu/trade/policy/countries-and-regions/countries/morocco/.

17 UN Comtrade, “Comtrade Database: China and Algeria,” UN Comtrade, 2020, https://comtrade.un.org/data.

18 UN Comtrade, “Comtrade Database: China and Egypt,” UN Comtrade, accessed October 19, 2021, https://comtrade.un.org/data.

19 “What Does China Export to Algeria? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/chn/dza/show/2019/; “What Does China Export to Morocco? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/chn/mar/show/2019/; “What Does China Export to Libya? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/chn/lby/show/2019/; “What Does China Export to Tunisia? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/chn/tun/show/2019/; “What Does China Export to Egypt? (2019),” Observatory of Economic Complexity, 2019, https://oec.world/en/visualize/tree_map/hs92/export/chn/egy/show/2019/.

20 “What Does Egypt Export to China? (2019),” Observatory of Economic Complexity; “What Does Algeria Export to China? (2019),” Observatory of Economic Complexity; “What Does Morocco Export to China? (2019),” Observatory of Economic Complexity; “What Does Tunisia Export to China? (2019),” Observatory of Economic Complexity; “What Does Libya Export to China? (2019),” Observatory of Economic Complexity; and Chris Alden, Faten Aggad-Clerx, and Vincent Castel, “Chinese Investments and Employment Creation in Algeria and Egypt,” African Development Bank, December 2012, https://blogs.lse.ac.uk/africaatlse/files/2012/12/Brochure-China_North-Africa-Quaterly-Analytical.pdf.

21 Phil K., “Egyptian Orange Exports to China up 107% in First 10 Months of 2019,” Produce Report, January 3, 2020, https://www.producereport.com/article/egyptian-orange-exports-china-107-first-10-months-2019.

22 “Chinese Investments in Africa,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2020, http://www.sais-cari.org/chinese-investment-in-africa.

23 The standard definition of foreign direct investment adopted by international organizations entails that an investor holds 10 percent or more of shares or voting rights of a company and that the investor is involved in the long-term management of the company. (See, for instance, the Organisation for Economic Co-operation and Development’s definition at Organisation for Economic Co-operation and Development, “OECD Economic Outlook,” no. 1, 2003, https://www.oecd-ilibrary.org/economics/oecd-economic-outlook-volume-2003-issue-1_eco_outlook-v2003-1-en.)

24 “Chinese Contract Revenues in Africa,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2020, http://www.sais-cari.org/data-chinese-contracts-in-africa.

25 “Chinese Investments in Africa,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative; and “Chinese Contract Revenues in Africa,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative.

26 Tin Hinane El-Kadi, “China and North Africa: History, Economic Engagement and Soft Power,” in Routledge Handbook on China–Middle East Relations (Abingdon: Routledge, 2021), https://www.routledge.com/Routledge-Handbook-on-ChinaMiddle-East-Relations/Fulton/p/book/9780367472702#:~:text=s)%20Support%20Material-,Book%20Description,trade%2C%20security%2C%20and%20diplomacy.&text=International%20relations%2C%20security%2C%20and%20diplomacy.

27 “China’s Arab Policy Paper,” Chinese Ministry of Foreign Affairs, January 2016, http://www.china.org.cn/world/2016-01/14/content_37573547.htm.

28 Oreglia, Ren, and Liao, “The Puzzle of the Digital Silk Road”; and “Seeking Soft Power, China Expands Activities in Arab Higher Education,” Wagdy Sawahel, February 1, 2016, https://www.al-fanarmedia.org/2016/02/seeking-soft-power-china-expands-activities-in-arab-higer.

29 Clayton Cheney, “China’s Digital Silk Road: Strategic Technological Competition and Exporting Political Illiberalism,” Council on Foreign Relations, Net Politics (blog), September 26, 2019, https://www.cfr.org/blog/chinas-digital-silk-road-strategic-technological-competition-and-exporting-political; “China Unveils Internet Plus Action Plan to Fuel Growth,” State Council, July 4, 2015, http://english.www.gov.cn/policies/latest_releases/2015/07/04/content_281475140165588.htm; and “China’s Arab Policy Paper,” Chinese Ministry of Foreign Affairs.

30 “China Established Its First Overseas Beidou Center in Tunisia,” CHCNAV.com, April 19, 2018, https://www.chcnav.com/about-us/news-detail/china-established-its-first-overseas-beidou-center-in-tunisia.

31 Ruth Sherlock, Lama al-Arian, and Sandy Wei, “Will Morocco’s Chinese-Funded ‘Tech City’ Ever Break Ground?,” October 3, 2018, https://www.wbur.org/npr/638297986/will-moroccos-chinese-funded-tech-city-ever-break-ground; and Ahmed Eljechtimi, “Morocco’s BMCE Bank Looks to Build on China Ties to Deliver $11 Billion Tech City,” Reuters, July 30, 2019, https://www.reuters.com/article/us-morocco-china-banks/moroccos-bmce-bank-looks-to-build-on-china-ties-to-deliver-11-billion-tech-city-idUSKCN1UP238.

32 “Morocco to Launch Chinese Industrial City in Tangiers,” Africa News, March 21, 2017, https://www.africanews.com/2017/03/21/morocco-to-launch-chinese-industrial-city-in-tangiers.

33 “Morocco Begins Construction of New Tech City in Tangier,” Construction Review Online, July 9, 2019, https://constructionreviewonline.com/2019/07/morocco-begins-construction-of-new-tech-city-in-tangier.

34 “Tangier Tech City Plans Revived With Selection of Chinese Giant CCCC,” January 5, 2019, https://www.globalconstructionreview.com/tangier-tech-city-plans-revived-selection-chinese.

35 Tin Hinane El Kadi, “The Promise and Peril of the Digital Silk Road,” Chatham House, June 6, 2019, https://www.chathamhouse.org/2019/06/promise-and-peril-digital-silk-road.

36 Nader Kabbani, “Youth Employment in the Middle East and North Africa: Revisiting and Reframing the Challenge,” Brookings Institution, February 26, 2019, https://www.brookings.edu/research/youth-employment-in-the-middle-east-and-north-africa-revisiting-and-reframing-the-challenge.

37 “The Future of Jobs and Skills in the Middle East and North Africa: Preparing the Region for the Fourth Industrial Revolution,” World Economic Forum, May 2017, https://www3.weforum.org/docs/WEF_EGW_FOJ_MENA.pdf.

38 Egyptian Ministry of Communications and Information Technology, “Egypt’s ICT 2030 Strategy,” Egyptian Ministry of Communications and Information Technology, https://mcit.gov.eg/en/ICT_Strategy.

39 Egyptian Ministry of Investment General Authority for Investment, “Law No. 72 of 2017: Promulgating the Investment Law,” 2017, https://www.gafi.gov.eg/english/startabusiness/laws-and-regulations/publishingimages/pages/businesslaws/investment%20law%20english%20ban.pdf.

40 APS, “L’augmentation du débit Internet Minimum Réalisée Grâce à d’‘Énormes’ Investissements,” [The increase in the minimum internet speed achieved thanks to “huge” investments], APS, October 10, 2021, https://www.aps.dz/sante-science-technologie/128654-l-augmentation-du-debit-internet-minimum-realisee-grace-a-d-enormes-investissements.

41 Henry Tugendhat, “How Huawei Succeeds in Africa: Training and Knowledge Transfers in Kenya and Nigeria,” Johns Hopkins University School of Advanced International Studies China-Africa Research Initiative, Working Paper no. 34, March 2020, https://static1.squarespace.com/static/5652847de4b033f56d2bdc29/t/5e73acb2efefbe3e97b7c258/1584639155488/WP+34+-+Tugendhat+-+Huawei+Kenya+Nigeria.pdf.

42 Ran Li and Kee-Cheok Cheong, “Huawei and ZTE in Malaysia: The Localisation of Chinese Transnational Enterprises,” Journal of Contemporary Asia 47, no. 5 (October 20, 2017): 752–773 https://doi.org/10.1080/00472336.2017.1346697.

43 Huawei, “Our Company,” Huawei, https://www.huawei.com/en/corporate-information.

44 Shen, “Across The Great (Fire) Wall: China and the Global Internet,” 299.

45 Yu Hong, Francois Bar, and Zheng An, “Chinese Telecommunications on the Threshold of

Convergence: Contexts, Possibilities, and Limitations of Forging a Domestic Demand-Based Growth Model,” Telecommunications Policy 36 (2012): 914–928; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2414271.

46 Li and Cheong, “Huawei and ZTE in Malaysia.”

47 Nathaniel Ahrens, “Huawei,” in China’s Competitiveness: Myths, Reality and Lessons for the United States and Japanese Study, ed. Kiyo and Aburaki and Nathaniel Ahrens, Center for Strategic and International Studies, 2013, https://www.csis.org/programs/japan-chair/japan-chair-archives/chinas-competitiveness-myths-realities-and-lessons-united.

48 Huawei, “2020 Annual Report,” Huawei, 2021, https://www.huawei.com/en/annual-report/2020.

49 Cyrus Lee, “Huawei Surpasses Ericsson as World’s Largest Telecom Equipment Vendor,” ZDNet.com, July 24, 2012, https://www.zdnet.com/article/huawei-surpasses-ericsson-as-worlds-largest-telecom-equipment-vendor.

50 Melanie Hart and Jordan Lind, “There Is a Solution to the Huawei Challenge,” Center for American Progress, October 14, 2020, https://www.americanprogress.org/article/solution-huawei-challenge.

51 Institute of Developing Economies, “The Role of China’s Financial Institutions,” https://www.ide.go.jp/English/Data/Africa_file/Manualreport/cia_11.html.

52 Henry Sanderson and Michael Forsythe, “China’s Superbank: Debt, Oil, and Influence: How the China Development Bank Is Rewriting the Rules of Finance,” Wiley Online Library, January 2, 2012, https://onlinelibrary.wiley.com/doi/book/10.1002/9781119199151.

53 Tugendhat, “How Huawei Succeeds in Africa,” 31.

54 “Loan Data,” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2019, http://www.sais-cari.org/data.

55 William Lazonick, “Stock Buybacks: From Retain-and Reinvest to Downsize-and-Distribute,” Brookings Institution, April 17, 2015, https://www.brookings.edu/research/stock-buybacks-from-retain-and-reinvest-to-downsize-and-distribute/; and “Cisco Announces $25 Share Buyback,” Financial Times, https://www.ft.com/content/189ab110-11e0-11e8-8cb6-b9ccc4c4dbbb.

56 Shen, “Across The Great (Fire) Wall: China and the Global Internet,” 57.

57 Scott Kennedy, “The Political Economy of Standards Coalitions: Explaining China’s Involvement in High-Tech Standards Wars,” Asia Policy, no. 2 (2006): 41–62, https://www.nbr.org/publication/the-political-economy-of-standards-coalitions-explaining-chinas-involvement-in-high-tech-standards-wars.

58 Scott Thurm, “Huawei Admits Copying Code From Cisco in Router Software,” Wall Street Journal, March 24, 2003, https://www.wsj.com/articles/SB10485560675556000; and

Cisco, “Cisco Systems Inc. and Cisco Technology, Inc. (Plaintiffs) v. Huawei Technologies Co. Ltd., Huawei America, Inc. and Futurewei Technologies, Inc. (Defendants): Complaint and Jury Demand,” January 3, 2022, https://web.archive.org/web/20220119193938/https://newsroom.cisco.com/dlls/filing.pdf.

59 Yuezhi Zhao, “China’s Pursuits of Indigenous Innovations in Information Technology Developments: Hopes, Follies and Uncertainties,” Chinese Journal of Communication 3, no. 3 (September 1, 2010): 266–289, https://doi.org/10.1080/17544750.2010.499628.

60 David Kirton, “Huawei Posts 3.2% Rise in Profit in 2020, as Revenues Decline From Outside of China,” Reuters, March 31, 2021, https://www.reuters.com/article/us-huawei-tech-results-idUSKBN2BN0XA.

61 James Kynge, “Huawei Records Biggest Jump in Patent Ownership in 2020,” Financial Times, March 16, 2021, https://www.ft.com/content/614c6149-2f6e-482f-b64a-97aa2496ac7f.

62 Wenxian Zhang, Ilan Alon, and Christoph Lattemann, Huawei Goes Global: Volume I: Made in China for the World (London: Palgrave Macmillan, 2020), https://dokumen.pub/huawei-goes-global-volume-i-made-in-china-for-the-world-1nbsped-3030475638-9783030475635.html; and Huawei, “Huawei Releases Innovation and Intellectual Property White Paper,” Huawei, March 25, 2021, https://www.huawei.com/ke/news/ke/2020/huawei%20releases%20innovation%20and%20intellectual%20property%20white%20paper.

63 Zhang, Alon, and Latteman, Huawei Goes Global: Volume II: Regional Geopolitical Perspectives and Crisis Management, (London, Palgrave Macmillan, 2020), https://link.springer.com/book/10.1007%2F978-3-030-47579-6.

64 Manya Koetse, “Huawei Phone With Built-In Muslim Prayer Function Stirs Controversy,” November 18, 2017, https://www.whatsonweibo.com/huawei-phone-built-muslim-prayer-function-stirs-controversy.

65 “Premier Wen Jiabao Talks With Trainees of Huawei Training Center in Egypt,” Chinese Embassy in Denmark, November 7, 2009, https://www.mfa.gov.cn/ce/cedk//eng/TourChina/t626256.htm.

66 John Calabrese, “The Huawei Wars and the 5G Revolution in the Gulf,” Middle East Institute, July 30, 2019, https://www.mei.edu/publications/huawei-wars-and-5g-revolution-gulf.

67 Simon Kemp, “Digital 2021: Egypt,” Data Reportal, February 11, 2021, https://datareportal.com/reports/digital-2021-egypt.

68 Ibid.

69 In many cases, countries’ mobile penetration rates are higher than their internet penetration rates. In addition, a mobile penetration above 100 percent implies that the number of mobile phones in the country exceeds the number of people. This information on the prominent mobile providers in each market is based on the author’s knowledge of the countries’ mobile phone sectors. See Simon Kemp, “Digital 2021: Algeria,” Data Reportal, February 11, 2021, https://datareportal.com/reports/digital-2021-algeria.

70 World Bank, “Internet Penetration Rates – World Average,” 2019, https://data.worldbank.org/indicator/IT.NET.USER.ZS.

71 GSM Association, “The State of Mobile Internet Connectivity 2021,” GSM Association, 2021, 66, https://www.gsma.com/r/wp-content/uploads/2021/09/The-State-of-Mobile-Internet-Connectivity-Report-2021.pdf.

72 Ibid.

73 Shailaja Pai, “Orange Gets 5G Spectrum in Egypt,” Developing Telecoms, February 9, 2022, https://developingtelecoms.com/telecom-business/telecom-regulation/12843-orange-gets-5g-spectrum-in-egypt.html; and James Barton, “Algeria to Prioritise Improving 4G Over Launching 5G,” Developing Telecoms, March 17, 2021, https://developingtelecoms.com/telecom-technology/wireless-networks/10867-algeria-to-prioritise-improving-4g-over-launching-5g.html.

74 Several Algerian and Egyptian engineers and experts revealed a slight dominance of Huawei over the ICT equipment market in conversations with the author. Author interviews with Algerian and Egyptian engineers familiar with the ICT equipment market between October 2021 and February 2022.

75 World Bank, “Population, Total – Nigeria, Egypt, Arab Rep., Ethiopia,” 2020, https://data.worldbank.org/indicator/SP.POP.TOTL?locations=NG-EG-ET.

76 Huawei, “Huawei Executives Met With Egyptian Prime Minister to Promote Digital Ecosystem Development in Egypt,” Huawei, April 22, 2019, https://www.huawei.com/en/news/2019/4/huawei-egyptian-prime-minister-digital-ecosystem-egypt.

77 Data confirmed by multiple Huawei workers and managers in Algeria and Egypt. Author interviews with several workers and managers in Algeria and Egypt between October 2021 and February 2022.

78 Li and Cheong, “Huawei and ZTE in Malaysia.”

79 Shen Hongyuan, “Sonatrach Transforms Its Oilfields in Algeria,” Huawei Enterprise, https://e.huawei.com/se/publications/global/ict_insights/201902271023/Success-Story/201904170833.

80 “Telecom Egypt, Huawei Sign $200M Long Term Financing Agreement,” Egypt Today, May 30, 2018, https://www.egypttoday.com/Article/3/51218/Telecom-Egypt-Huawei-sign-200M-long-term-financing-agreement.

81 Khalid Hassan, “US Warns Egypt to Avoid Chinese Companies on 5G Connections,” Al-Monitor, November 3, 2020,https://www.al-monitor.com/originals/2020/11/egypt-china-us-war-5g-networks-boycott.html.

82 Author interviews conducted in Algiers and Zoom calls with Egyptian ICT engineers working for Huawei between September 23, 2021, and December 28, 2021; and Motolani Agbebi, “China in Africa’s Telecom Sector: Opportunities for Human Capital Development? A Case of Huawei in Nigeria,” Human Resource Development International 21, no. 5 (2018): 532–551, https://www.tandfonline.com/doi/abs/10.1080/13678868.2018.1512232?journalCode=rhrd20.

83 “Huawei ICT Academy: Building a Talent Ecosystem and Boosting the ICT Industry’s Development,” Huawei Enterprise, https://e.huawei.com/en/publications/global/ict_insights/201907041409/talent-ecosystem/huawei-ict-academy.

84 Author interviews with Algerian students at the National Institute of Post and Information and Communication Technologies, Algiers, Algeria, on July 12, 2021.

85 “TIC – Huawei Algérie Investit dans les Universités Algériennes” [ICT – Huawei Algeria invests in Algerian universities], Maghreb Emergent, January 5, 2021, https://maghrebemergent.net/tic-huawei-algerie-investit-dans-les-universites-algeriennes.

86 Author interview with a Huawei representative, Algiers, Algeria, October 26, 2021.

87 “Huawei Organises the First ICT Talent Bank Annual Conference,” Egypt Today, October 3, 2019, https://www.egypttoday.com/Article/6/75452/Huawei-organizes-the-first-ICT-Talent-Bank-annual-conference.

88 See a video Huawei’s ICT academy in Egypt posted on Facebook. Huawei ICT Academy-Egypt, “Huawei ICT Talent Bank,” Facebook post, January 10, 2021, https://www.facebook.com/HuaweiICTAcademyEgy/posts/huawei-ict-talent-bank-itb-provides-different-international-certifications-such-/852720728632435.

89 Ibid.

90 Author interviews with several Egyptian and Algerian ICT engineers between October 2021 and February 2022.

91 These insights from author interviews coincide with the findings of past research by others on this topic. See Henry Tugendhat, “Connection Issues: A Study on the Limitations of Knowledge Transfer in Huawei’s African Training Centres,” Journal of Chinese Economic and Business Studies 19, no. 4 (July 1, 2021): 1–27,https://www.tandfonline.com/doi/abs/10.1080/14765284.2021.1943194?journalCode=rcea20.

92 Ibid.

93 Ibid.

94 “Algeria, Egypt and Nigeria Teams Among Winners at Huawei’s Global ICT Contest,” Aptantech, November 18, 2020, https://aptantech.com/2020/11/18/algeria-egypt-nigeria-teams-among-winners-at-huaweis-global-ict-contest.

95 Tugendhat, “Connection Issues.”

96 Author interview with one of Huawei’s channel partners, Algiers, Algeria, November 20, 2021; and author interview over Zoom with a Cairo-based channel partner December 14, 2021.

97 Ecofin Agency, “Algeria: Huawei Launched Its Oued Smar Phone Assembly Plant on January 22, 2019”; and author interview with former assembly line manager, Algiers, Algeria, December 28, 2021.

98 Ibid.

99 Hamid Ould Ahmed, “Algeria Bans Imports of Cell Phones, Veg and Other Goods to Curb Trade Deficit,” Reuters, January 9, 2018, https://www.reuters.com/article/ozabs-uk-algeria-economy-idAFKBN1EY1ED-OZABS.

100 Ibid.

101 “Samsung Opens First Smartphone Assembly Plant in Algeria,” Algérie Presse Service, December 12, 2017, https://www.aps.dz/en/economy/21761-samsung-launches-first-smartphone-assembly-plant-in-algeria.

102 L’ExpressDZ, “Huawei Lance son Usine d’Assemblage de Smartphones en Algérie,” [Huawei launches its smartphone assembly plant in Algeria], January 22, 2019, https://www.express-dz.com/2019/01/22/huawei-lance-son-usine-dassemblage-de-smartphones-en-algerie.

103 Ibid.

104 “Population, Total – Algeria,” World Bank, 2020, https://data.worldbank.org/indicator/SP.POP.TOTL?locations=DZ.

105 “Mobile Vendor Market Share Algeria,” StatCounter Global Stats, December 2021, https://gs.statcounter.com/vendor-market-share/mobile/algeria/2020.

106 Author interview with ICT expert, Algiers, Algeria, December 15, 2021.

107 “Condor et ses Consœurs de l’Industrie dans la Ligne de Mire d’Alger” [Condor and similar firms in the industry are being scrutinized by Algiers], Jeune Afrique, March 11, 2020, https://www.jeuneafrique.com/mag/906732/economie/condor-et-ses-consoeurs-de-lindustrie-dans-la-ligne-de-mire-dalger.

108 Author interviews with multiple factory employees, Algiers, Algeria, November 20 to December 30, 2021.

109 Huawei, “Huawei Announces New OpenLab in Cairo to Build ICT Ecosystem in Northern Africa.”

110 Ibid.

111 Ibid.

112 Egyptian Ministry of Communications and Information Technology, “Digital Egypt,” Egyptian Ministry of Communications and Information Technology, https://mcit.gov.eg/en/Digital_Egypt.

113 Egyptian Ministry of Communications and Information Technology, “Innovation,” Egyptian Ministry of Communications and Information Technology, https://mcit.gov.eg/en/Innovation.

114 Ibid.

115 Huawei, “Huawei Announces New OpenLab in Cairo to Build ICT Ecosystem in Northern Africa”; World Bank, “Population, Total – Egypt, Arab Rep.,” World Bank, 2020, https://data.worldbank.org/indicator/SP.POP.TOTL?locations=EG.

116 Ibid.

117 Efe Udin, “Huawei Opens Its Sixth Research Institute in France – Focuses on Mathematics and Computing,” Gizchina.com, October 11, 2020, https://www.gizchina.com/2020/10/11/huawei-opens-its-sixth-research-institute-in-france-focuses-on-mathematics-and-computing; and Tugendhat, “How Huawei Succeeds in Africa.”

118 Tugendhat, “Connection Issues”; and Tugendhat, “How Huawei Succeeds in Africa.”

119 Agbebi, “China in Africa’s Telecom Sector.”

120 Tugendhat, “Connection Issues.”

121 Author interviews conducted with Algerian subcontractors, Algiers, Algeria, on October 17, 2021.

122 El Kadi, “The Promise and Peril of the Digital Silk Road.”

123 Ibid.

124 Ibid.


https://carnegieendowment.org/2022/04/14/how-huawei-s-localization-in-north-africa-delivered-mixed-returns-pub-86889

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