In December 1st 2018, Meng Wanzhou was arrested in Vancouver International Airport. She was the Chief Financial Officer of Huawei, a Chinese multinational corporation specialized in telecommunications technology and consumer electronics. Last year, Huawei is now world’s second largest smartphone manufacturer, only behind Samsung. Its annual revenue has reached $108 billion, and it is now considered as one of the most important MNCs in the world.  Its name is means “Chinese achievement”. Located in Shenzhen, the “Silicon Valley of China”, Huawei is now one of the key leaders in research, innovation, and technology development. China is now widely perceived as a rising power. Graham Allison recently published the book ““Destined for War: Can America and China Escape Thucydides’s Trap?”, suggesting that a rising power challenges the established power, tensions escalate into physical collusion. And China is challenging the United States as the rising power. Many media outlets and literature suggest the same, as many are mesmerised by the impressive economic growth and technological development of China in recent year. China has also launched ambitious programs such as the Belt and Road Initiative, constructing infrastructure and economic ties in order to expand its sphere of influence. China has also invested heavily in African , providing packages of loans and infrastructure. Yet, some of China’s strategies has been widely criticized. Its “debt-trap diplomacy”, for example, is considered as a threat to sovereignty of poorer and weaker states.

The rise of MNCs are also subject to criticism for their geopolitical purposes. The rise and expansion of numerous powerful MNCs have followed the ambitious rise of Chinese on the global stage. This includes high-tech companies like Huawei. However, this is problematic for many Western states, because since China is a centralized “communist” state , the MNCs have extensive links with the Chinese Communist Party and the Chinese state. Therefore, there are numerous security concerns regarding cybersecurity. For example, its 5G technology could be used to unable unauthorized surveillance of consumers by the Chinese authorities. USA, UK, Japan and Australia banned this technology from their territory. Meng Wanzhou was even arrested because of security concerns. Yet, is the “cybersecurity” argument just an excuse for protectionism? From a mercantilist view, it can be interpreted as a move to protect Silicon Valley’s market share by “bullying” Huawei. Is the war of 5G technology the new containment? If we apply realism to this question, then the answer would be yes. 

Nonetheless, this has not stopped Huawei’s momentum as the rising tech titan. Huawei’s profits increased by 25% last year despite US efforts to curtail its business operations. Its 5G technology is very innovative, giving Huawei an important competitive advantage. Huawei is also expanding in developing countries. Huawei has built 70% of Africa’s 4G network. Its 5G technology is reaching markets as far as Paraguay, my home country (its inception was just last week). But most importantly, Huawei surpassed Apple in December last year in term of smartphone sales. This is symbolic because it means that R&D made in Shenzhen, supported by Beijing, is eclipsing Silicon Valley. Now, China is using MNCs like Huawei as instruments of rising hegemony. As Gilpin explained the instrumentalization of MNCs for American Hegemony, Huawei’s large market share could give China a strong position in the world. Huawei can also serve to spread Confucian values and Chinese worldview. High-tech industries could also be used as a tool for soft power: attraction as national power. Attractive, innovative technology made in China constructs the image of China as a global leader in science and technology. With its large market share, China would be able spread its rules and standards around the world. In addition, Chinese control of telecommunications networks give the Chinese state the capability to control consumers’ daily life (e.g. surveillance) . I believe that Huawei is an instrument in the construction of China’s global order as the alternative to current US-led liberal order.

We live in a world today that is somewhat dominated by capitalism and consumerism, and so we rely heavily on MNCs and the products they produce to go by our daily lives, with products such as gas, food products, clothing, etc. Looking at the top 25 MNCs that are more powerful than many countries, mentioned according to Foreign Policy, you see Walmart as the top company. I personally visit Walmart at least twice weekly because of its convenient location and prices, and I suspect thousands of others do so too. So how is it that an MNC or a company, that is a retailer, becomes stronger, or more powerful, than several other countries? Would such a scary phenomena change the world indefinitely?

Parag Khanna makes an interesting argument that sovereignty and government laws are not the only thing that matters anymore, but we are mostly more controlled by supply and demand, which indicates that the power of globalization and capitalism has shifted power from countries to MNCs. And the reason is, because of that, some MNCs, such as Apple and Walmart, are worth more than some countries. For example, Khanna mentions that “the cash that Apple has on hand exceeds the GDPs of two-thirds of the world’s countries” (Khanna, 2016). Moreover, MNCs do not only gain power because of its consumers, but because of their political agenda. For example, Google, in 2017, spent around US$18 million lobbying politicians and lawmakers, which got them to be the number one lobbyer in the world (Green, 2018). Therefore, it is not exactly just an economic factor that strengthens MNCs, but political ones as well.

My question here is, should we be worried about such a phenomena? Is it okay for us to be living somewhere and know that MNCs have more power than such country? Are MNCs taking over the world? Again, I raise the importance of the rise of globalization, and how it is affecting all of us daily. Globalization has paved the way for capitalism, and the rise of capitalism has made it very easy for MNCs to climb the ladder of power. Corporations are becoming more central players in global affairs, and are getting more involved politically, rather than just economically. If MNCs are able to lobby politicians, and one company can have more money than the GDP of two-thirds of the world combined, then they have enough power to take over the world. MNCs are already becoming stateless, so is it possible that at one point, us – citizens – become stateless, or have our laws put by MNCs?

References:

Green, A. (2018, September 18). Are multinationals now more powerful than the nation state?). ‘ Retrieved from https://www.spectator.com.au/2018/09/are-multinationals-now-more-powerful-than-the-nation-state/

Khanna, P., & Francis, D. (2016, March 15). These 25 Companies Are More Powerful Than Many Countries. Retrieved from https://foreignpolicy.com/2016/03/15/these-25-companies-are-more-powerful-than-many-countries-multinational-corporate-wealth-power/