Meng Wanzhou Release & Huawei's Future: China Roundup

China Tech Roundup: Huawei, Funding, and Key Developments

Welcome to TechCrunch’s latest overview of the Chinese tech sector, providing a summary of recent happenings and their global implications.

Meng Wanzhou's Release

A significant development occurred on Friday with the release of Meng Wanzhou, Huawei’s CFO, from house arrest in Vancouver.

This release followed the attainment of a resolution with the U.S. Department of Justice, marking a turning point in a long-standing legal case.

Notable Funding Rounds

Several Chinese startups secured substantial funding this week, signaling continued investment in innovative technologies.

• Momenta, an autonomous driving company supported by Daimler, was among the recipients of major investment.
• Nreal, a firm specializing in augmented reality technology, also announced a significant funding round.
• Hai Robotics, a manufacturer of advanced warehouse robotics, similarly received considerable financial backing.

Implications and Future Outlook

These events highlight the dynamic nature of the Chinese tech landscape and its increasing influence on global technology trends.

The resolution of the Meng Wanzhou case could potentially ease tensions and foster greater collaboration, while the funding rounds demonstrate ongoing innovation within the country’s startup ecosystem.

Significant Agreement Reached

The daughter of Huawei’s founder, Ren Zhengfei – Meng Wanzhou – reached an agreement with the U.S. Department of Justice. This involved an admission of certain misdeeds, while prosecutors agreed to defer fraud charges related to wire and bank transactions and potentially dismiss the indictment in the year 2022.

Meng’s arrest occurred in Vancouver, Canada, in 2018, based on suspicions of violating U.S. trade sanctions imposed on Iran. Her case subsequently became a point of contention, exacerbating tensions in U.S.-China relations. Coinciding with Meng’s departure for Shenzhen – the location of Huawei’s headquarters – on Friday, China facilitated the release of two Canadian citizens previously detained on espionage allegations. Beijing consistently maintains there is no connection between these detentions and Meng’s arrest.

Appearing remotely in court via video link on Friday, Meng entered a plea of not guilty to charges encompassing conspiracy to commit bank fraud, conspiracy to commit wire fraud, bank fraud, and wire fraud. However, she acknowledged the fundamental facts supporting the DOJ’s accusations. These include “multiple material misrepresentations to a senior executive of a financial institution concerning Huawei’s business dealings in Iran, undertaken to maintain Huawei’s banking relationship with said institution.”

According to Assistant Attorney General Kenneth A. Polite Jr. of the DOJ’s Criminal Division, “Meng Wanzhou, CFO of Huawei Technologies, today admitted to providing false information regarding Huawei’s operations within Iran. Consequently, the financial institution continued its business dealings with Huawei in contravention of U.S. law.” He further stated that the prosecution team is actively preparing for trial against Huawei and anticipates presenting their case against the company in court.

News sources in China have largely omitted Meng’s acknowledgement of wrongdoing. Online, Chinese users quickly celebrated the Huawei executive’s release after a three-year period. Within a few hours, the hashtag #MengWanzhouReturningToMotherland accumulated over 1 billion views on the Chinese microblogging platform, Weibo.

Huawei released a statement indicating, “We anticipate Meng Wanzhou’s safe return home to reunite with her family. Huawei will continue to defend itself against the allegations presented in the U.S. District Court for the Eastern District of New York.”

Upon her release, Meng described the preceding three years as “a disruptive time,” impacting her roles as a mother, wife, and company executive. She conveyed that the support received from China, both from the government and the public, provided her with strength and resilience during challenging times.

Meng’s homecoming is expected to improve morale among Huawei employees. However, the company continues to experience the repercussions of U.S. sanctions. Huawei’s chairman, Eric Xu, stated on Friday that the company anticipates a revenue decline of at least $30-40 billion in its smartphone business for 2021.

Having once been a global leader in the handset market, Huawei has since lost its prominent position, overtaken by domestic competitors. Xiaomi, for example, surpassed Apple to become the second best-selling brand globally in the second quarter of the year.

In 2019, Huawei lost access to essential chip components and software following its placement on an export blacklist by the Trump Administration. The company has since intensified its efforts to develop its own handset chips and operating system, though achieving this in a short timeframe has proven difficult.

Investment Highlights

Recent reports indicate that General Motors is committing $300 million to Momenta, a Chinese firm specializing in autonomous driving technology. This investment joins existing backing from companies like Toyota, SAIC Motor, and Mercedes-Benz AG.

Significant capital injections are now crucial for success within China's rapidly evolving autonomous driving sector. Forming alliances with established automotive manufacturers is proving particularly vital as emerging robotaxi companies assess the commercial feasibility of deploying advanced driver-assistance and fully autonomous systems in various vehicle types.

Throughout the last twelve months, competitors of Momenta – including Pony.ai, WeRide, and Deeproute – have each secured funding rounds totaling hundreds of millions of dollars.

Nreal, established by former Magic Leap employee Xu Chi, has announced a $100 million funding round to facilitate international expansion and the creation of next-generation augmented reality products. We previously reported on their $15 million Series A funding in 2019, and CNBC indicates the company now boasts a valuation of $700 million.

Nreal distinguishes itself by offering AR headsets that are both more accessible in price and lighter in weight compared to those of its Western competitors.

Hai Robotics, a Shenzhen-based company focused on robotic case handling solutions for warehouses, has recently secured $200 million in funding. Demand for industrial robots within China is increasing, driven by government initiatives to enhance efficiency and address labor shortages in the manufacturing industry.

Huang He, an investor specializing in industrial automation, previously shared his perspective:

However, he also cautioned about potential market saturation:

In August, Syrius, another Shenzhen-based warehouse robotics startup, revealed it had raised over $20 million in a funding round led by ByteDance.