Huawei scrambles to untangle crossed lines | Business| Economy and finance news from a German perspective | DW | 22.01.2019
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Huawei scrambles to untangle crossed lines

Huawei just needs a better "brand storytelling" approach, a company source reportedly said. But will the telecoms giant's charm offensive work as the EU wakes up to Chinese industrial espionage?

Chinese telco Huawei kicked off a charm offensive this week aimed at salvaging its rapidly deteriorating reputation.

The company has been hit with accusations of stealing trade secrets, several countries are blocking or planning to block its equipment from sensitive infrastructure projects, and its finance chief is under arrest in Canada.

Read moreAnalyst: China has to be put in the category of a 'rogue state'

Board member Chen Lifang said this week there had been false allegations, fake news, and rumors spread about Huawei, the world's largest supplier of telecoms network equipment.

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Second Canadian businessman questioned in China

"We have tended in the past to keep a low profile, perhaps lending credence to misperceptions we are too secretive. This is not true and we encourage those making such comments to compare Huawei with other leading technology companies in terms of access to our HQ, staff and senior executives." He added the company is committing itself to become more transparent for "the foreseeable future," although gave no timeframe.

Courting the media

The company also recently offered the international media a tour of its smartphone production factory in Dongguan and hosted a round table with Ren Zhengfei, the company's founder. 

Ren said in an interview after the tour that he put business first and would "definitely say no" to a request from the Chinese government to spy on western customers. He went on to call US President Donald Trump "a great president."

Ren added that there was no law in China requiring any company to install a mandatory back door to telecommunications equipment. Not everyone agrees, though.

Daniella Cave, a specialist on cybersecurity at the Australian Strategic Policy Institute (ASPI), told DW that Beijing had introduced a new national intelligence law in 2017 that compelled organizations and individuals to participate in intelligence activities and to keep the intelligence activities they are aware of a secret. "There have also been allegations that Chinese companies have been complicit — either knowingly or unknowingly — in the theft of secrets and valuable government data," Cave said.

Adding to the souring of the tone of the debate, China said on Tuesday the US and Canada had abused their extradition agreements in the arrest of Huawei executive Meng Wanzhou. The US said it would proceed with the formal extradition from Canada of Meng, Ren's daughter.

China Shenzhen Ren Zhengfei (picture-alliance/AP Photo/V. Yu)

Ren Zhengfei, founder and CEO of Huawei

Who's line is it anyway?

Berlin said last week it was considering banning Huawei from providing 5G equipment, the next generation of mobile communications technology. The company has been a front-runner, but Washington is ramping up political pressure in its trade spat with Beijing. It wants Germany to follow other Western countries in banning or restricting the engagement of Chinese firms such as Huawei and ZTE in their domestic internet systems.

"European and many other intelligence services and government leaders know that Huawei is, and will continue to, spy on behalf of China," Nicholas Eftimiades, a lecturer at Penn State Harrisburg, told DW. "The leadership choice, therefore, has become balancing act between national security, commerce and international relations."

Germany has for some time also accused Beijing of interfering in the EU, in particular in Greece, Hungary, and the West Balkans, and has been pushing for an EU-wide investment screening process to better control foreign investment in strategic areas.

Transparency not just a Chinese problem

"Huawei's is an understandable effort," Jan-Peter Kleinhans, project director for the Internet of Things (IoT) Security at Berlin-based think tank Stiftung Neue Verantwortung, told DW. "China plays an ever-increasing role in the ICT supply chain and thus Chinese companies will come under more scrutiny by western governments."

The more transparent and cooperative a Chinese company is the better, he added. "The current discussion shows that even though Huawei has long-standing business relationships with many European telcos, some member states' governments feel that they do not quite understand the company. This is perfect ground for speculation and half-knowledge," Kleinhans said.

Kanada Verhaftung Meng Wanzhou, Huawei | Porträt, Archiv (picture-alliance/Zuma Press/Mfc/Ropi)

Huawei Finance Chief Meng Wanzhou

The EU's response

But Europe has strong reasons to take a more punitive approach toward Chinese 5G. 

The European Commission has argued Huawei was able to become the EU's top telecommunication supplier by obtaining subsidies from Chinese state banks. EU officials have also said that infrastructure built with technology manufactured in China may give Chinese companies access to sensitive data and industrial information. 

European Commission Vice President for the Digital Single Market Andrus Ansip, told DW, "I think we have to be worried about Huawei and other Chinese companies." 

Various countries, including Britain, France, Germany, and Norway have publicly raised concerns about using Huawei equipment for next-generation mobile networks. But others, like Spain, Poland, Portugal and Hungary, have been more welcoming of Chinese involvement.

"All companies doing business in the EU enjoy the benefits of the Single Market, but must also respect and honestly apply the EU principles, laws and standards," Ansip said.

Tightening cybersecurity

The EU is building its cyber resilience and defense against cyber-attacks or measures that endanger the cybersecurity of digital life and trustworthiness of ICT products and services in the EU that could potentially threaten our economy and society, Ansip said.

Read moreBerlin's dilemma: My way or the Huawei?

The Cybersecurity Act agreed in December establishes a voluntarily EU framework for cybersecurity certification for ICT products and services, and gives a mandate to the EU agency for cybersecurity ENISA to better support Member States in tackling cybersecurity threats, he added.

"Responsible state behavior in cyberspace is key for the EU. The EU is against any action which could undermine mutual trust, understanding, and cooperation in the cyberspace. This is what we communicate to all third countries including China," Ansip concluded.

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