Many executives consider themselves figures of great significance, but few are capable of sending a chill through global markets simply by getting arrested. Meng Wanzhou (孟晚舟), also known as Sabrina Meng or Cathy Meng, is one.
The chief financial officer of Chinese telecoms giant Huawei — and the daughter of its billionaire founder, Ren Zhengfei (任正非) — was detained in Vancouver, British Columbia, on Dec. 1. She could face extradition to the US on charges thought to be related to allegations that Huawei breached sanctions levied by Washington against Iran.
Meng’s arrest, and Beijing’s demand that she be released amid allegations of “hooliganism” from the Chinese media, has dashed hopes of a thaw in US-China trade tensions. Chances of a rapprochement had appeared to be on the rise following a 90-day tariff truce agreed between the two countries at the recent G20 summit in Buenos Aires.
Illustration: Mountain People
Stock markets in the US and Europe — already skittish during this parlous period for relations between the world’s two biggest economies — on Tuesday and Thursday last week gyrated as investors considered the possibility of a fresh tariff escalation undermining an already fragile global economy.
While its finance director’s arrest has placed the company squarely at the center of world affairs, Huawei is no stranger to being scrutinized with open distrust. It has been barred from involvement in the installation of 5G mobile networks in India, New Zealand and Australia, blocked from making acquisitions in the US and barred from selling telephones on military bases by the US Department of Defense.
There is no official prohibition in the UK, but British Telecom (BT) has excluded Huawei telecoms infrastructure from its own 5G rollout and removed some of its equipment from the 4G network.
Concerns about Huawei seem to emanate, at least in part, from the history of its 74-year-old founder, Ren, who has long had ties with both the Chinese People’s Liberation Army, where he served as an engineer, and the Chinese Communist Party (CCP).
Moreover, his company has grown into a globe-straddling colossus, the world’s largest telecoms equipment manufacturer, selling in 170 countries. It also overtook Apple earlier this year to become the world’s second-largest smartphone manufacturer behind Samsung, churning out 54 million handsets in three months.
Yet, however great its success, Huawei has never been able to dispel the cloud of suspicion that hangs over Ren and his creation. Given the volume of espionage and cyberattacks that originate in China — targeting nations and companies alike — questions have inevitably been raised about the security implications of using Huawei’s technology.
It is, after all, a company founded by a military technology expert. Concern has focused on whether Huawei’s kit could be used to spy on foreign competitors, steal intellectual property or even install “kill switches” in energy or industrial projects.
Some analysts have warned that, in the event of a conflict, Beijing could exploit hidden backdoors in Huawei technology to shut down a foreign power’s infrastructure at the touch of a button.
Ren himself has, in his relatively rare public appearances, sought to dismiss such concerns as scaremongering.
At the World Economic Forum in Davos in 2015 he told an audience: “There’s no way we can possibly penetrate into other people’s systems and we have never received such a request from the Chinese government.”
That, of course, is exactly what you would expect a spy to say.
However, the real question is not so much whether Huawei is a covert espionage operation, but whether it could be coerced into becoming one.
For a start, Chinese companies — and Huawei is no exception — typically have a CCP committee within their corporate architecture. What these committees do, or how much influence they wield, is hard to gauge.
The new Chinese National Intelligence Law that came into force last year might be of even greater concern.
Article 7 of the law states: “All organizations and citizens shall, in accordance with the law, support, cooperate with and collaborate in national intelligence work, and guard the secrecy of national intelligence work they are aware of.”
“The state will protect individuals and organizations that support, cooperate with and collaborate in national intelligence work,” the law adds.
Alarming conditions such as these lend some credence to Huawei’s bogeyman status among governments, even in the absence of any hard evidence to support their fears.
UNITED STATES
Washington has long distrusted Huawei and the company’s plan to buy a stake in rival 3Com collapsed in 2008 in the face of political opposition.
Then-US president Barack Obama even defended the US National Security Agency hacking into its systems, citing national security concerns.
And the US has not only banned the company from involvement in its own 5G networks, but urged other countries to do the same.
UNITED KINGDOM
Huawei agreed to submit its technology for testing at a center in Banbury, England, where officials from the Government Communications Headquarters (GCHQ) run the rule over its products.
Despite that, BT has excluded its equipment from its 5G plans and even removed some of it from existing 4G infrastructure.
OCEANIA
Australia and New Zealand have both barred Huawei and rival ZTE from providing telecoms equipment for their 5G networks.
The Australian ruling did not make reference to Huawei specifically, but mentioned companies likely to be subject to directions from their domestic governments.
INDIA
In the world’s second-largest mobile market, Huawei was reportedly barred from participating in 5G, although it denied that this was the case and said it had been invited to test its equipment in 5G trials.
OTHERS
Huawei is also said to be facing the prospect of restrictions in a host of other countries, including Italy, Japan, Germany and Canada.
The company has gone to great lengths to address its image problem, hiring legions of public relations advisers and allowing GCHQ to run the rule over its tech at the special center in Banbury.
The company even hired the British government’s former chief information officer, John Suffolk, as its global cybersecurity officer.
Suffolk has said that any fears about Huawei ought to equally apply to any firm that has a role in projects of national significance.
“Believe no one and check everything,” he told The Economist.
Huawei’s problem appears to be that no matter how closely it is examined, the facts of its founder’s past — coupled with the global importance of telecoms — mean it can never be given the benefit of the doubt.
Ren has said that the company’s name comes from a patriotic slogan that he saw on a wall one day: zhonghua youwei (中華有為, “China makes a difference”).
Unfortunately for Huawei, that difference appears to be an aura of mistrust that is nigh-on impossible to escape.
THE FOUNDER
The arrest of Meng Wanzhou has thrown a new spotlight not only on the company, but also on its founder: Ren.
Much of the doubt surrounding Huawei stems from Ren’s background in the People’s Liberation Army between 1974 and 1983, where he was an engineer.
Ren’s rags-to-riches rise is part of Huawei’s official narrative. The 74-year-old grew up poor, the son of teachers in a remote mountainous town in China’ s southwestern Guizhou Province.
He studied at the Chongqing Institute of Civil Engineering and Architecture and later joined the military “by chance” in the 1970s, when fabric was being rationed and the government was recruiting anyone with a university education to help build equipment to produce synthetic fabric.
After leaving the army, Ren landed in Shenzhen, designated a special economic zone as part of China’s transition to a market economy. He started Huawei with about US$5,000 in capital from five investors and no obvious plan.
“It was not as romantic as you imagine,” he once said. “Neither was it so wonderful.”
In 2013, Ren said he had considered renaming his creation.
“For many years there has been a debate in our company over whether we should change this name. Recently, we’ve decided not to change it. We are going to teach foreigners how to pronounce it, and not always say it like ‘Hawaii,’” he told the Beijing Times.
For the uninitiated, Huawei is pronounced “hoo-ah-way.”
As his company expanded to become China’s largest tech company by staff, employing more than 180,000 people, Ren maintained a low profile. The bulk of his international media appearances seem aimed at dispelling doubts about his or the company’s connection to the Chinese military.
Yet Ren’s CCP credentials continue to dog him. He has been a member since 1978 and was invited to attend the party’s 12th National Congress in 1982. For the 40th anniversary of China’s reform and opening-up this year, Ren was deemed one of 100 “excellent private entrepreneurs” who “firmly safeguard the leadership of the CCP.”
Critics also point to the company’s status as one of China’s “national champions” — companies whose global expansion is considered to be in the national interest.
Ren owns about 1 percent of Huawei and is said to have control over most major decisions, in some cases still running it like a military unit, despite supposedly sharing the job with three rotating chief executives.
A memo leaked last year called on employees to adopt 21 “military disciplines.”
While Ren has repeatedly said that none of his children would succeed him, Meng was seen as being groomed to be her father’s successor.
Additional reporting by Wang Xueying, Lily Kuo and Kate Lyon
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