Huawei – US quarrel explained


The quarrel between the US and China over Huawei is increasing. China yesterday officially called on the Americans to stop “the unreasonable suppression” of the telecommunication issue.

What is going on?

The fight has been going on for almost ten years and has now been sharpened by the trade war. America this week has thirteen offenses against the top woman of the Chinese telecom company Huawei, Meng Wanzhou and Huawei themselves thwarted. One of them is a violation of US sanctions against Iran between 2009 and 2014 by a subsidiary of Huawei, Skycom. The accusations that they have stolen US network technology are much more dangerous for the Chinese. FBI director Wray spoke of ‘shameless and persistent actions to exploit American companies and financial institutions’.

Chinese people who steal western technology. Sounds familiar.

Indeed, but now it probably does not end with a hissing sound. Huawei is not only a Chinese company, it has also been upgraded from a one-man business to a world leader in the field of the 5G mobile network. Because almost everything will soon run on these superfast connections, huge interests are at stake. The Americans fear losing their technological and economic lead to Huawei, which, according to Washington, is a disguised, subsidized Chinese state company.

What are the risks?

Consider wiretapping for example. That is child’s play through the global communication network. China could also try to put pressure on Huawei in the event of a conflict with another country. For example by blocking the data traffic.

Is Huawei really controlled by the Chinese state?

The media-shy Huawei boss Ren Zhengfrei begs that he only shares his tax form with the government and has nothing to do with the Chinese government or the army. The company has offered to be open to external audits on various occasions. This transparency is doubted in the United States and elsewhere in the world. Australia and New Zealand have excluded Huawei from their new 5G network. Canada thinks about it. The EU is investigating the case.

That founder Ren Zhengfrei, once an engineer in the Chinese army, without state support and state control could become so big in a country where the Communist Party is supreme, is hard to believe. Huawei turned sales in 2017 against 100 billion euros. Also remarkable: after the arrest of top woman Meng Wanzhou, the Chinese government reacted with the arrest of two Canadians and a death sentence (on appeal) from a Canadian drug smuggler. This firm response suggests at least a connection between Huawei and the Chinese state. At the beginning of this year, a Chinese Huawei employee in Poland was accused of espionage. The prestigious university of Oxford reported this month to suspend the Huawei donations.

By: Oliver I. Kjeldsen

Oliver I. Kjeldsen has a corporate finance and extensive expertise in company audit. He grants us amazing insights on taxation, international affairs and friendly advice on nearly any topic of interest. His email is [email protected]

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