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Huawei and European industry: Natural partners

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As the turbulent year of 2020 comes to an end, it is clear that the past months have been quite extraordinary for all of us. Even though we are starting to see the end of the tunnel with mass vaccinations soon to be underway all over the world, the pandemic continues to heavily impact our daily lives, writes Sophie Batas, director for cybersecurity, Huawei EU.

At Huawei, we end this challenging year with an announcement that has particular significance for me: Huawei’s first manufacturing plant outside China will be located in Brumath, just next to Strasbourg and Baden-Baden. Here, in the Franco-German border region in the very heart of Europe, Huawei is creating hundreds of quality jobs. France is the country in which I was born. It is satisfying to work for a company that meets its local obligations — obligations like, for example, paying tax in the country in which it is operating. As a convinced European, Huawei’s decision to strategically invest in France — and symbolically in a location just kilometers away from the seat of the European Parliament in Strasbourg — is the right thing to do.

Here, in the Franco-German border region in the very heart of Europe, Huawei is creating hundreds of quality jobs.

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On anniversaries of the Schuman Declaration, we regularly think back to the legacy of the founding fathers of the European project. But this noble legacy can only be preserved if we continue to fill these ideals with life. These should not just be words, delivered coldly, to an unlistening public. Rather, they should be important each day, in tangible, economically viable ways.

It is not a coincidence that Huawei has chosen a location in the heart of Europe for its first manufacturing plant outside China. As an ambitious ICT company, Huawei operates at the forefront of communication technologies. To continue setting trends and standards, Huawei invests €20 billion in research and development in-house each year. The EU now ranks Huawei among the top three global innovators, together with our technology peers Google and Microsoft.

Europe is key for Huawei in our quest to continue shaping the Fourth Industrial Revolution and all the fascinating benefits that this transformation offers us humans here in Europe and all over the world.

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If there is a bloc that is setting the right ICT standards for the whole world, we think it’s the European Union.

Why then, you might ask, is Europe so important for Huawei? Well, if there is a bloc that is setting the right ICT standards for the whole world, we think it’s the European Union. GDPR has revolutionized data protection well beyond the EU’s borders. It is fast becoming the global standard in this field. In a similar way, the European Union is now taking decisive steps to regulate digital markets.

Huawei is a truly global ICT company. Our headquarters might be in Shenzhen, a young, modern and progressive hi-tech metropolis with a subtropical climate, but our horizons are so much wider than just China. At Huawei we know that China might be our most important market in terms of sheer volume. However, Europe is our most important market when it comes to global standards.

Sophie Batas, director for cybersecurity, Huawei EU

That’s why in the context of the Digital Markets Act, Huawei supports the European Commission’s approach of principled leadership to ensure contestability and fair competition in digital markets. This is a bold step to protect citizens from predatory business models that seek to lock in citizens and small businesses, copy or crush competitors, while also harming European democracy and our social fabric in the process.

Huawei shares the same objective — to serve European citizens. We want to do this by providing important digital technologies like 5G, as well as new technologies such as 6G and the internet of things with industry-leading trust, security and privacy standards.

As we gradually leave the pandemic behind, Europe in the near future will be facing the tough challenge of overcoming the economic effects of the current slowdown. More than ever, keeping the European way of life will mean reforming and adapting to new technologies and to digitalization. Europe should remain the best place on earth. As the provider of cutting-edge technology and as a responsible company observing the highest cybersecurity standards, Huawei is the natural partner for Europe’s leading and emerging companies. For today and for tomorrow.

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EU ranks HUAWEI among top three global innovators

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Has the shine worn off activist investment?

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A few recent cases suggest that the tide may finally be turning on activist investment, which until recently seemed as if it was becoming an entrenched part of the business world. Although the value of activist investor-held assets may have been climbing in recent years (in the UK, this figure grew 43% between 2017 and 2019 to reach $5.8 billion), the number of campaigns fell by 30% in the year leading up to September 2020. Of course, that drop-off can partly be explained by the fallout from the ongoing coronavirus pandemic, but the fact that more and more plays appear to be falling on deaf ears could signal a bleaker long-term outlook for activist agitators going forwards.

The latest case in point comes from England, where wealth management fund St James’s Place (SJP) were the subject of an attempted activist intervention on the part of PrimeStone Capital last month. After purchasing a 1.2% stake in the company, the fund sent an open letter to the SJP board of directors challenging their recent track record and calling for targeted improvements. However, the lack of incision or originality in the PrimeStone manifesto meant that it was brushed off with relative ease by SJP, with little impact being felt on its share price. The underwhelming nature and outcome of the campaign is indicative of a growing trend in recent years – and one that could be set to become more pronounced in a post-Covid-19 society.

PrimeStone unable to inspire

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The PrimeStone play took the traditional form favoured by activist investors; after acquiring a minority stake in SJP, the fund tried to flex its muscles by highlighting the perceived shortcomings of the current board in an 11-page missive. Among other issues, the letter identified the company’s bloated corporate structure (over 120 head of department on the payroll), flagging Asian interests and tumbling share price (stocks have fallen 7% since 2016). They also identified a “high-cost culture” in SJP’s backroom and made unfavorable comparisons with other prosperous platform businesses like AJ Bell and Integrafin.

While some of the criticisms had elements of validity, none of them were especially novel—and they didn’t paint a complete picture. In fact, several third parties have come to the defence of SJP’s board, pointing out that equating the company’s downturn with the rise of interests such as AJ Bell is unfair and overly simplistic, and that when set against more reasonable touchstones such as Brewin Dolphin or Rathbones, SJP holds its own remarkably well.

PrimeStone’s admonishments over SJP’s high spending may hold some water, but they fail to recognize that much of that outlay was unavoidable, since the firm was forced to comply with regulatory changes and succumb to revenue headwinds beyond its control. Its impressive performance against its competitors confirms that the company has been dealing with sector-wide issues exacerbated by the pandemic, something which PrimeStone singularly failed to fully acknowledge or address.

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Momentous vote imminent for URW

It’s a similar story across the Channel, where French billionaire Xavier Niel & businessman Léon Bressler have collected a 5% stake in international shopping mall operator Unibail-Rodamco-Westfield (URW) and are adopting Anglo-Saxon activist investor tactics to try and secure URW board seats for themselves and push URW into a risky strategy to drive up its share price in the short term.

It’s clear that, like most companies in the retail sector, URW needs a fresh strategy to help weather the pandemic-induced recession, particularly given its relatively high level of debt (more than €27 billion). To that end, URW’s board of directors are hopeful of launching project RESET, which targets a capital raise of €3.5 billion in order to maintain the company’s good investment-grade credit rating and ensure continued access to all important credit markets, while gradually deleveraging the shopping mall business.

Niel and Bressler, however, want to forego the €3.5bn capital increase in favour of selling off the firm’s US portfolio—a collection of prestigious shopping centres which have by and large proven resistant to the changing retail environment—to pay down debt. The activist investors’ plan is being opposed by a number of third party advisory firms such as Proxinvest and Glass Lewis, with the latter calling it “an excessively risky gambit”. Given that credit rating agency Moody’s have predicted an 18-month slump in rental income that is likely to hit shopping centres – and have even gone as far as to warn that failure to implement the capital raise underpinning RESET could result in a downgrading of URW’s rating – it seems likely that Niel and Bressler’s ambitions will be rebuffed at the November 10th shareholder meeting, in the same way that PrimeStone’s have been.

Long-term growth over short-term gains

Elsewhere, Twitter CEO Jack Dorsey appears to have also overcome an attempt by high-profile activist investor Elliott Management to oust him from his role. Although a recent committee meeting did cede to some of Elliott’s demands, such as reducing board terms from three years to one, it chose to declare its allegiance to a chief executive who had overseen total shareholder returns of 19% prior to Elliott’s involvement with the social media behemoth earlier this year.

Alongside the atypically uninspiring campaigns conducted elsewhere in the market, and the retrogression of the sector as a whole, could it be that activist investors are losing their clout? For a long time, they have drawn attention to their ventures through flashy antics and bold prognoses, but it seems that companies and shareholders alike are catching on to the fact that behind their bluster, their approaches often contain fatal flaws. Namely, a focus on short-term inflation of the share price to the detriment of long-term stability is being exposed as the irresponsible gamble that it is – and in a shaky post-Covid economy, judicious prudence is likely to be prized above immediate profit with increasing regularity.

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#WelshSiliconValleys - Future funding will anchor a new generation of cyber security companies in #Wales

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New funding will help to secure Wales’ place as the home of future tech leaders. Eluned Morgan, the Minister for International Relations, has announced £250,000 in Welsh Government funding to help create the next generation of Welsh technology companies, during her six-day visit to North America.

Eluned Morgan, the Minister for International Relations

Eluned Morgan, the Minister for International Relations

The Welsh government has pledged the support to match fund cyber start-ups graduating out of the Newport-based tech hub Alacrity Foundation, which aims to nurture new hi-tech leaders through its technology programme, providing graduates with practical business training, software skills and mentoring – as part of a 15-month “boot camp” style course.

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The new funds will help seed fund new cyber security companies graduating from Alacrity.

The new funding follows more than £3.7 million provided to Alacrity by Welsh Government, alongside matched funding from Wesley Clover and the Waterloo Foundation, since 2011 to create new tech start-ups in Wales.  With up to a further £5m of Welsh Government match funding committed to seeding those new companies to help them grow and flourish in Wales.

The Minister announced the new funding following a meeting with Welsh tech businessman Sir Terry Matthews, chairman of Wesley Clover International, and Prof Simon Gibson, chairman of the Alacrity Foundation.

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Sir Terry Matthews & Eluned Morgan AM

Sir Terry Matthews & Eluned Morgan AM

Speaking during her visit, the minister said: “This funding is further commitment from the Welsh Government to ensure that Wales remains a strong home for our tech sector, which is valued at £8.5 billion – and growing.

“Those graduating from the entrepreneurship programme will have all of the potential and all of the skills needed to be leaders of highly successful tech companies in Wales.

“We, of course, want to see that talent nurtured and taught in Wales, and we want to see their skills and ingenuity employed to the benefit of Welsh businesses.

“That’s why we’ve made the decision we have – we want to make sure that support is in place to help Alacrity’s graduates can make their mark on the tech world.

“We have an incredibly strong technological and cyber-security sector in Wales, and the help of programmes like the Alacrity Foundation is vital in ensuring that we continue to host and support companies working at the cutting edge of technology.”

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