China is not a single entity. Huawei is not going to choose low quality high price local startup over suppliers with good reputation if they have that choice.
Sanction means those uncompetitive local startups don't have to compete with established players, giving them chance to catch up.
I wish more people knew or understood this. The central government, as much as it wants, doesn't have great control on the local level. It's even enshrined in a Chinese idiom: 天高皇帝遠 or "Heaven is high and the emperor is far away". Furthermore, China's model is actually quite decentralized. There's a lot of freedom at the provincial and local level -- it pretty much has to but the CCP has been able to leverage it to experiment with different ideas at different provinces.
As that article describes, Huawei is effectively employee-owned, though the legal arrangement is not straightforward (because of China's laws on stock ownership at the time Huawei was founded).
The article says that it's claimed that Huawei is... but that it's misleading (virtual shares) and that whenever ask the question dodgy answers are given.
The answers make perfect sense in the context of Chinese law.
This is how Huawei was set up decades ago. They would have had no reason to hide or obfuscate their ownership back then. They used a legal device - the union holds shares on behalf of the employees - to get around restrictions on the number of shareholders in a private company.
