Huawei’s International Future Grows Darker by the Day
Over the past week, more decision makers levied complaints against Huawei, the leading telecommunication equipment provider and electronics heavyweight. Most recently, U.S. Vice-President Mike Pence headlined the Munich Security Conference where he labeled the Chinese company as a security threat. Furthermore, he asked for the cooperation of international security partners to refrain from doing business with Huawei.
“Chinese law requires them to provide Beijing’s vast security apparatus with access to any data that touches their networks or equipment,” Pence said on Saturday.
Pence’s comments are the latest in a year’s worth of developments of anti-Huawei sentiment across western nations. The saga of the troubled telecom company has included sales bans, indictments, arrests, and more than all else, stern lectures from leaders on both sides. The effort to suffocate Huawei’s international operations has its roots in political and economic tensions between the U.S. and China.
For its part, the U.K. National Cyber Security Centre recently declared that Huawei poses no risk to the average consumer, following a year-long assessment of the company. Alex Younger, MI6 spy chief, was careful not to take a hardline stance, however. The issue requires more conversation and analysis, he said, but the U.K. should not rely on any single company to monopolize the telecommunication equipment. Judging by the British reaction, it seems a government ban is not immediately forthcoming, although several companies have already decided to part ways with Huawei.
BT Group, one of Huawei’s first European partners, stated that not only would it avoid using equipment from the Chinese firm in its new 5G network, but that it would remove it from existing 3G and 4G services.
In Germany, Angela Merkel has both the company and China on her radar. “We need to talk to China to ensure that companies do not simply give up all data that is used to the Chinese state,” Merkel said.
Mike Pompeo, U.S. secretary of state, also warned that if other countries use Huawei equipment, the U.S. would find it hard to maintain partnerships. In addition to the U.S., New Zealand and Australia have also banned Huawei and ZTE equipment from 5G networks. Canada is also considering a similar measure.
Huawei wasn’t always a powerhouse with a target on its back. Its rise to global prominence in the telecommunications industry began with Telefort, a Dutch cellular provider. As operators rolled out 3G networks in the early 2000s, Telefort struggled with the high cost of making the upgrade. At the time, Huawei was relatively new to the industry and desperate to prove itself. Huawei’s head of consumer business Richard You Chengdong was serving as vice-president of wireless networks in 2004. He arranged a meeting with Telestar and showed off the company’s equipment prowess: smaller and cheaper base stations that were precisely the solution to Telestar’s dilemma.
The meeting proved fruitful in both the short and long term, resulting in a 230 million euro contract between the two companies and leading Huaewi to seal deals with BT Group and Vodafone Group. Suddenly the Chinese firm had established a dominant presence in Europe. Expanding its reach internationally in turn led to a larger foothold at home in China as telecommunication businesses were sold on Huawei’s ability to deliver.
Huawei quickly became the world’s largest telecom equipment provider, but now it’s fighting to defend that title. Doing so requires fending off allegations, first that it is an arm of the Chinese government. While the company declares that it is employee-owned, the company was founded by Ren Zhengfei, a former officer in the People’s Liberation Army. Zhengfei’s political connections undoubtedly helped his company climb its way to the top of the industry and is the primary reason Huawei’s international opposition is quick to label it as a state-run business.
That’s only the starting point. Critically, as Pence stated during his visit to Munich, there are valid concerns over possible espionage through Huawei equipment. It is possible, but not yet proven, that Huawei could possible install backdoors in its phones, cellular modems and networking equipment. With these backdoors, Huawei could theoretically eavesdrop on all data sent to and from a device. By extension, this would mean the Chinese government itself would have access to the data.
While a backdoor in Huawei smartphones would likely have been discovered by now given the sheer number of devices in use and the size of the Android community, espionage tactics with modems or other commercial equipment would be harder to discover given their nature. Enterprise-grade technology is rigorously designed as closed systems to prevent tampering, according to James Sanders, technology writer at Tech Republic. Because of this, they are extremely difficult to dissect and analyze for potential backdoors.
Concerns about Huawei, though unfounded, are reasonable. China has increasingly been taking more measures to monitor its citizens, so building a method into Huawei technology would be effective. It would also give China nearly unfettered access to data across the globe.
As if country-wide bans weren’t enough trouble for Huawei, it also has to contend with recent indictments for trade secret theft and fraud in the U.S. The company allegedly offered bonuses for employees who stole information from companies such as T-Mobile and Apple. The company was also charged with evading U.S. sanctions by selling equipment to Iran.
“To the detriment of American ingenuity, Huawei continually disregarded the laws of the United States in the hopes of gaining an unfair economic advantage,” said FBI Director Christopher Wray.
Complicating matters further, Huawei Chief Financial Officer Meng Wanzhou was arrested in Canada and charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud. Notably, she is also Zhengfei’s daughter.
In its defense, both the Chinese government and Huawei officials have issued statements condemning the international pressure. Yang Jiechi, a government official, even attended the Munich Security Conference where he accused the U.S. of pushing its own interests on its European allies.
Amid allegations of spying, whether proven or not, and the mounting evidence of stealing trade secrets, the future looks bleak for Huawei. It’s hard to imagine a way for the company to turn this around and as long as China publicly defends it, the case only worsens. The backlash against the tech giant is first and foremost due to its cozy relationship with the government; more government officials defending it, however right they may be, will only worsen Huawei’s case.