Huawei, A Security Threat or U.S. PR Bullying?

On July 15, 2019

Huawei Technologies Co., — China’s most global company and the world’s largest telecommunications manufacturer — has been under U.S. scrutiny as it tries to dominate the new 5G wireless market. At issue is that U.S. officials are concerned that Huawei products could be conduits for Chinese espionage. 

How Big Is Huawei?

Huawei is one of the world’s biggest companies, leading in telecommunications gear, smartphones, cloud computing and cybersecurity, and operations in Asia, Europe, and Africa. Huawei’s revenue exceeds that of Home Depot Inc., and Boeing Co. The telco juggernaut invested billions into 5G and is one of China’s top filers of patents both internationally and domestically. It has built 5G networks in over10 countries already and is aiming for 20 more by 2020. 

However, there have been concerns that have come along with this enormous and rapid growth. In December of 2018, Huawei’s chief financial officer was arrested in Canada and is now facing criminal charges in the U.S. The company has been banned from buying American-made components, and it has been shut out of infrastructure projects–last year, the U.S. Congress prohibited federal agencies and contractors from using Huawei equipment. This year, the U.S. is threatening to withhold intelligence-sharing data with NATO allies if they use Huawei equipment. In Poland, an employee was arrested on suspicion of spying for the Chinese government. 

From a PR Perspective

The U.S.and Huawei have not always been at odds. In fact, in 2003, 3Com and Huawei formed a joint venture and called it 3Com-Huawei in English and Huawei-3Com in Chinese. Its base was located in Hong Kong with principal operations in Hangzhou, China. From the perspective of a young PR practitioner (me) who’s job at 3Com was to pitch the company’s CoreBuilder modular hub, the partnership was considered welcome news and a well-needed technology boost to help get a leg-up on Cisco Systems.  

According to The Register, Bruce Claflin, 3Com president, and chief executive officer, said the joint venture delivers a high-end extension to its existing telco products. Products from Huawei-3Com offer a “superior price-performance proposition.” 

Fast Company has Claflin’s pitch to Huawei as We want to reenter the enterprise. We have a tarnished but well-known brand in the enterprise, we have channels, we’ve got distribution all over the world, and we can instantly help you expand and get over the brand issue for Huawei by using 3Com. Conversely, we have no real presence in China and you do. Using the Huawei brand can help us penetrate there. And last, we want to use your R&D assets as the core development site for us not only because they’re skilled and hardworking, but also because they’re so affordable.

After several marketing missteps at 3Com (Who remembers Audry, the Internet Appliance?), I personally felt the joint venture was exactly what the company needed to get back on track to once again become a thorn in Cisco’s side. Although I had a difficult time spelling the China company and often pronounced it, Yahweh—which I quickly corrected that it was not the god of the Israelites—I was excited to introduce new products to my tech journalist contacts.

From Partnership With U.S. Tech Darling to Dreaded Spy

So what went wrong? From the initial partnership formation, there was mistrust—that seems to have been validated. Recently, Vodafone Italy discovered that from 2009 to 2011 “hidden backdoors” were placed in Huawei equipment that allowed the company to access users’ home networks as well as Vodafone’s Italian fixed-line network. The vulnerabilities were discovered in Huawei’s home internet routers, as well as equipment used in its network infrastructure. The router and network vulnerabilities were in the company’s networks in the UK, Germany, Spain, and Portugal.

Civil cases in the U.S. concerning Huawei have included: Cisco Systems Inc., which sued for patent infringement and for copying codes; Motorola which sued for stealing trade secrets; T-Mobile sued for stealing robotic technology; and the U.S. Justice Department has indicted Huawei for theft of trade secrets. 

Much of the concern revolves around these “backdoors” in the technology that allows the company to hand over data to the government. Huawei and the People’s Liberation Army are both under the control of the Communist Party, which is headed by the country’s president, who is chairman of the Military Commission. This arrangement is of concern when, in 2016, Chinese intelligence agents acquired National Security Agency hacking tools and re-aimed them at American allies and companies in Europe and Asia. 

It has been noted that Huawei refused to list the full military backgrounds of several company officials including its founder, who helped build the army’s first nationwide communications network; its chief legal officer who graduated from the National University of Defense Science and Technology; and the chairman who received his degrees from a military research institute. Yet, all three executives’ military ties were not listed in the company biographies. Why so deceptive?

Along with its massive market force, its ties to the Communist Party, history of litigation and deceptive practices, add to the concern that the company is now designing its own semiconductors, making it a threat to such giants as Qualcomm. With positioning such as this and its drive to dominate the telecom market, Huawei is a company on every nation’s radar as well as on the daily schedules of every tech giant’s legal team. Instances such as the Pentagon in June conducting a cyber attack on computer systems in Iran that control rocket and missile launches, make it clear that the future of war is online and that the future of any nation’s wealth and power will rely on its ability to support its high tech industry. 

When The Chips Are Down, Does A Poker Face Matter?

Now that plenty of facts have been exposed, it seems Huawei’s chips may indeed be Trojan Horses. For the near-term, it would seem as if no amount of PR will help the U.S. relationship—but hold the smartphone!  

According to CNN Business, six weeks after Huawei was blacklisted by the U.S. government, President Donald Trump had what the Chinese telecom firm described as a “U-turn.” Trump said that “U.S. companies can sell their equipment to Huawei,” as long as the transactions won present a “great, national emergency problem.”

It seems like a good poker face does matter because even though some form of exchange will happen between the two superpowers, Foreignpolicy.com reports that China’s state media outlets have stood solidly behind the company and given its views a global hearing. English-language state media outlets such as China Daily and the Global Times—the undiluted voice of the party-state—have run piece after piece with titles like “US betrays all its ugliness with its attacks on Huawei” and “US urged to ensure lawful rights of firms.” The voice of the CCP’s party-state propaganda apparatus now carries these messages far beyond China’s borders. To cite one of many examples, five of the six most-followed media outlets on Facebook are Chinese state media.  

At the moment it does not matter if the U.S./Huawei relationship is PR or poker face driven—it’s the Dollar and Yen making the calls.