Huawei spying in Poland raises calls for boycott | Business| Economy and finance news from a German perspective | DW | 14.01.2019
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Huawei spying in Poland raises calls for boycott

The Chinese telecom giant's industrial espionage activities in Poland have prompted calls for the company to be banned. But while the US is leading the drive for a boycott, EU governments remain undecided.

Despite the arrest of Huawei executive Wang Weijing in Poland on Friday, the Chinese telecom equipment supplier denies that the manager and his Polish accomplice are involved in spying for China. "His alleged actions have no relation to the company," Huawei said in a statement on Sunday, adding that Wang's contract had nevertheless been terminated.

The arrests of Wang and a former high-ranking cybersecurity employee of Poland's domestic intelligence agency ABM come a month after Huawei's chief financial officer (CFO) Meng Wanzhou — the daughter of the company's founder — was arrested in Canada at the request of US authorities.

Read more: Sieren's China: Huawei and diplomatic dynamite

Washington has launched an effort to blacklist the company internationally over security concerns. Several countries in the Asia-Pacific region, including Australia and New Zealand already have followed the US call, but the picture in Europe is more nuanced.

That is because Huawei's capabilities in the next-generation 5G mobile communication technology are so attractive. The technology represents a quantum leap in wireless communication speed, and will be key to developing the Internet of Things (IoT), including self-driving cars.

The Chinese supplier is said to be well ahead of global rivals, such as Sweden's Ericsson, Finland's Nokia and South Korea's Samsung. Dexter Thillien, an analyst at Fitch Solutions, said that European operators were looking for alternatives to Huawei, but soon realized that the company was currently "more innovative and probably better for 5G" than others.

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EU response mixed

In Europe, Portugal's main operator MEO signed a deal with Huawei in December, praising the Chinese company's "know how, competence, talent and capacity to develop technology and invest in our country."

Norway, whose current networks are largely made up of Huawei equipment, is thinking of ways to reduce its "vulnerability." The Nordic country's transport and communications ministry said recently that it wants to reduce the role of companies with whom Oslo has "no security cooperation," — an implicit reference to China.

Read more: Huawei 'could give Chinese spies our secrets,' EU fears

Concern for 5G security is shared by Britain, where Defense Secretary Gavin Williamson said he had "grave, very deep concerns about Huawei providing the 5G network in Britain."

And the Czech cybersecurity agency said Chinese laws "force private companies with their headquarters in China to cooperate with intelligence services," which could make them "a threat" if involved with a country's key technology.     

Germany sitting on the fence

Meanwhile, Europe's top economy, Germany, is under increasing pressure from Washington to follow suit. The country has relatively good relations with China, which is why Berlin has sought to keep a distance from the US's aggressive trade stance toward Beijing.

On the other hand, China is said to employ around one million intelligence agents, many of whom are focused on obtaining German technologies. The German Interior Ministry estimates that Chinese economic espionage could cost Europe's largest economy between €20 billion ($22.9 billion) and €50 billion a year.

Read more: ZTE, Huawei bans: Genuine security concerns or part of China trade spat?

"Germany is an important target for Beijing, because its companies are world-class in areas the Chinese Communist Party considers strategic," Peter Mattis, research fellow in China Studies at the Victims of Communism Memorial Foundation, told DW

Guangzhou Messe Qualcomm 5G (picture-alliance/dpa/L. Zhihao)

China invested heavily in the standardization of 5G because it realized that with 3G/4G it had lost the battle over standards and was thus dependent on foreign, mainly US, companies

The country's biggest telecoms firm, Deutsche Telekom, said recently it was reviewing its vendor plans in Germany and other European markets where it operates. According to the Bundesnetzagentur (BNetzA), the German Network Agency in charge of Germany's 5G auction, security is not included in the conditions for awarding the contract. And some agree this is the way to go.

"I think Germany is right to not blindly follow any foreign advice regarding Chinese 5G manufacturers," Jan-Peter Kleinhans, project director for IoT Security at Berlin-based think tank Stiftung Neue Verantwortung, told DW.

Kleinhans believes China conducts extensive industrial espionage, but that this should not be conflated with 5G. "Banning Chinese 5G manufacturers from public procurement because of fear over industrial espionage does not make sense," Kleinhans says.

Kleinhans noted that Huawei already provides about 45 percent of Germany's 4G base stations and so far there has been no case in which they have been exploited for industrial espionage.

"It is technically possible but absolutely not efficient to use base stations for industrial espionage. It is much easier to use 'conventional' attack vectors such as phishing mails or other means of network exploitation to compromise a network and establish persistent access to then be able to steal blueprints, data," he says.

It is difficult to assess these threats from outside the security community, David Kennedy, a telecom analyst, said. "But there have never been any reported instances of backdoors or anything similar in Huawei equipment," he told DW.

USA Filiale von T-Mobile in New York (picture-alliance/dpa/EPA/J. Lane)

The planned merger of Deutsche Telekom's subsidiary T-Mobile US and Sprint could become a chip on the bargaining table. DT's promise to end the use of Huawei equipment could tip US regulators to sign off on their $26-billion transaction

Unfair treatment

Meanwhile, Huawei is making great efforts to prove its good faith. It has opened test labs for its equipment in Germany and the UK in cooperation with the governments there, and is to launch another in Brussels by the end of the first quarter.

Huawei rotating chairman Guo Ping in late December complained that his company was being subjected to "incredibly unfair treatment."

"Huawei has never and will never present a security threat," Guo wrote in a New Year's message to staff.

Europe is a crucial market for Huawei, whose combined sales for Europe, the Middle East and Africa accounted for 27 percent of overall group sales in 2017, mostly thanks to spending by European operators.

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