Huawei: fears in the West are misplaced and could backfire in the long run
Western fears of Chinese telecoms giant Huawei infiltrating their technological infrastructure are rooted in fears of China’s rise. Three of the “Five Eyes Network” of English-speaking states that share intelligence – the US, Australia and New Zealand – have blocked their local firms from using Huawei tech in building their 5G networks. The UK and Canada are under pressure to follow suit.
But a lot of these fears are misplaced and cutting Huawei out of the picture could backfire in the long run. Not only would it limit Western access to new, state-of-the-art technology, it could create a world split along technological lines.
Depending on who you talk to, you’ll get vastly differing portrayals of Huawei. Many of the concerns are based on the idea that the company is in bed with the Chinese government and point to founder, Ren Zhengfei’s background as a People’s Liberation Army engineer. Yet Ren only owns about 1.4% of the company’s stock – the rest is owned by more than 80,000 of Huawei’s employees and it is a private company, not a state-owned enterprise.
Some say Huawei has committed systematic intellectual theft. Yet its rivals Nokia and Ericsson have been slow to release telecoms equipment as advanced as Huawei’s and British telecom network BT says it is “the only one true 5G supplier”.
Another story you could focus on is how Huawei came to dominate the telecoms equipment market in Africa. Economic miracles on this continent over the last decade have been generated by mobile phone services. Sticking it out in a number of adverse conditions, Huawei has been the key provider of this infrastructure.
But Huawei is not currently being scrutinized for its business conduct in Africa. The focus is on how Huawei has filed the most patents in Europe, spent more money on research than its rivals Cisco, Nokia or Ericsson, earned half of its income from outside of China, and boasts a revenue twice as much as that of Cisco and significantly more than that of IBM. This is the Huawei that Western governments and a lot of the media are becoming the most vocal against.
Keep your friends close …
When officials in Washington talk about the importance of banning Huawei from the US or forbidding US companies like Qualcomm and Intel from selling products to Huawei, they are talking about something that is harder to advocate, at least publicly. And that is to disengage from China – because disengaging is not possible in the world’s globalized economy. Just about everybody, including Cisco, Ericsson and Nokia, makes their telecoms equipment in China.
What’s truly at risk by disengaging from Huawei in the West is to lose the ability to scrutinize the entity they fear most. In the telecoms sector, when service providers like BT, Verizon, and AT&T buy equipment from Huawei it’s not as simple as buying a book on Amazon. To become a supplier for BT, for instance, you need to pass a number of tests.
To test Huawei’s qualifications, BT brought out a big team to Huawei’s headquarters in Shenzhen to carry out rounds of tests, without giving prior notice. BT then picked a number of names out of Huawei’s roster and conducted independent interviews using their own interpreters. So demanding were BT’s criteria that the chairwoman of Huawei had to set up an independent BT support department to directly report to her, and then hired Mercer, a US consultancy firm, to develop a new governance structure.
Research Information & Knowledge Hub for additional information on IMD publications