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Huawei’s Rotating Chairman Finally Speaks Out: “We Are Facing Some Challenges”

Huawei Technology Rotating Chairman Ken Hu opened a rare meeting with foreign journalists Tuesday afternoon with an understatement: “This year has been so eventful.”

It certainly has. On the one hand, Huawei, already the world’s largest manufacturer of telecommunications equipment, outsold Apple to become the world’s second-largest seller of smartphones—putting the Chinese company on track to post more than $100 billion in yearly revenue. On the other, in recent months a host of Western nations have labeled Huawei a threat to national security, threatening its long-term growth prospects. And on Dec. 1, Meng Wanzhou, the company’s chief financial officer and daughter of founder Ren Zhengfei, was arrested in Vancouver, where she remains awaiting extradition to the U.S. on fraud charges.

Hu acknowledged: “We are facing some challenges.”

Today’s briefing for foreign press, which lasted more than two hours, was unusual for Huawei, a privately held company renowned for its public reticence. But Hu’s message was clear: Huawei considers itself a global company, takes cybersecurity issues seriously, and categorically rejects attempts to discredit it as a “Chinese spy.”

“When it comes to security allegations, it’s best to let the facts speak for themselves,” Hu declared. “And the fact is that Huawei’s record is clean.”

Hu declined to discuss Meng’s detention, beyond stating that he had confidence in Huawei’s global regulatory compliance processes and the “fairness and independence of judicial systems involved in this case.” Meng has been granted bail and allowed to reside in one of her two Vancouver mansions while awaiting extradition—provided she pay for her own surveillance and wear a GPS monitoring device on her ankle so the Canadian courts can track her whereabouts at all times. Hu said he looked forward to a “just conclusion of this matter.”

 

Getting technical

The agenda for today focused on Huawei’s tech prowess. The press tour began in the “White House” — a nickname given to the grand hall situated in the heart of Huawei’s Shenzhen campus — where a number of Huawei’s testing facilities are located. In the advanced materials labs, engineers showcased the patents won by Huawei researchers for boosting the efficiency and reducing the size of vital telecommunications equipment.

Considering the current climate of mistrust, the tour’s most pertinent stop was at Huawei’s Independent Cyber Security Lab, where independent security experts evaluate Huawei’s products. Officials said Huawei’s customers are also welcome to the lab to run their own verification checks on hardware and software they purchase. Hu stressed that, in Huawei’s 30-year history, there has been never been any evidence of a security threat originating from the company.

Even so, concerns remain. In July a board comprised of U.K. telecom executives, government officials and heads of national intelligence agencies tasked with overseeing the Huawei Cyber Security Evaluation Center (HCSEC) in England released a report highlighting technical deficiencies in Huawei’s security protocols.

The board warned that due to “shortcomings” in Huawei’s engineering processes, there could only be “limited assurance” that the company does not pose a security risk. Huawei, to its credit, has moved to address these issues, pledging $2 billion to upgrade its security framework. Centers similar to the HCSEC, which Huawei established eight years ago to screen equipment and software sold to U.K. clients, exist in Canada and Germany. The facilities evidence Huawei’s willingness to engage governments on security concerns and could be a model for dispelling the fears of other administrations.

“We are very willing to take proactive measures to address and mitigate security concerns,” Hu assured the journalists, as the sun glinted off the solar panels atop the factories in Huawei’s sprawling Dongguang campus. “Under this principle we remain open to having active dialogues with governments around the world to understand their concerns and explore all possible solution.”

 

The mark of China

Hu would prefer that Huawei’s dialogues with concerned partners focus on technology rather than politics, letting Huawei play to its strengths. Huawei has an army of 80,000 research engineers and has splashed $57 billion on R&D over the past 10 years to emerge as the global leader in telecom equipment. Technological faults can be resolved swiftly. It’s what Hu calls “political” and “ideological” objections to Huawei’s dominance in the sphere that are harder to shake.

Unlike ZTE, the state-owned telecom manufacturer brought to a standstill by U.S. sanctions last summer, Huawei is a private company and claims to be 100% employee-owned. But its ownership structure is convoluted and, at best, translucent.

Ren Zhengfei, Huawei’s founder and lifelong president, officially owns 1.4% of the company’s shares. The rest are held by the Union of Huawei Investment and Holding Company on behalf of the employees. Critics suspect that the Union is controlled by an elite layer of management with loyalties to China’s ruling Communist Party. Huawei has said that isn’t true.

However, since Beijing passed the National Intelligence Law last year, calling for “all organizations [to] collaborate in national intelligence work”, whether Huawei is directly connected to central authorities matters less to foreign objectors.

In August, Canberra banned Huawei ­— and ZTE — from providing 5G high-speed wireless Internet equipment in Australia, citing the National Intelligence Law as a concern and this month Sen. Marco Rubio said he would introduce legislation to ban Huawei in the U.S. because, “There isn’t a single company in China that doesn’t have to do whatever the government tells them to do.”

Huawei asserts that Beijing has never requested that the company spy on one of its customers and, moreover, there is no law that would compel Huawei to do so. Responding to the Australian ban, Huawei ran a notice on the company website thundering that “A mistaken and narrow understanding of Chinese law should not serve as the basis for concerns about Huawei’s business.”

Hu didn’t want to say that the Australian market was permanently closed to Huawei. The company has invested heavily in developing cutting-edge tech for deploying 5G, examples of which were showcased to journalists Tuesday in an unprecedented show of openness. To lose any market would be a disappointing setback.

As the afternoon slipped by in the board room, Hu repeatedly returned to his mantra that any allegation levied against Huawei should be based on evidence and, as for suggestions Huawei is a Chinese spy, there is no proof. But for some governments it seems Huawei is permanently cast in the shadow of its home county.

“We welcome any open dialogue with anyone who has legitimate concerns,” Hu said in his closing remarks, switching to English after conducting his interviews through an interpreter. “But for any ungrounded allegations, we will firmly defend ourselves and we won’t allow our reputation to be tarnished.”

 

Correction: A previous version of this article referred to Ken Hu as Huawei’s ‘Rotating CEO’. Hu is one of Huawei’s three Rotating Chairmen; Ren Zhengfei is the company’s CEO.