Founder Ren Zhengfei's connections were useful in building the Chinese conglomerate Huawei. Photo: AFP
Founder Ren Zhengfei's connections were useful in building the Chinese conglomerate Huawei. Photo: AFP

For PLC read PLA. While Huawei might not be a public limited company, founder Ren Zhengfei did have a distinguished career in the People’s Liberation Army before setting up the telecom giant.

His connections were useful in building a Chinese conglomerate which has become a symbol of high-tech achievement and ambition in the world’s second-largest economy.

Cheap loans from state-owned banks helped Huawei expand in the early days after Ren started the company with 21,000 yuan (then US$4,400) of his own money in 1987.

This was a time when former and active PLA personnel were branching out in big business as China opened up to the world through economic reforms rolled out by Paramount Leader Deng Xiaoping.

“In recent years the People’s Liberation Army has acquired a considerable reputation for its business activities,” a 1994 report entitled The Chinese Military and Its Business Operations: The PLA as Entrepreneur, highlighted. “These activities represent a significant and far-reaching change.”

Fast forward 24 years and there are lingering concerns that Ren’s “family business” is too closely aligned to China’s government, claims which Huawei has repeatedly denied.

In an effort to dispel these allegations and accusations of “cyber-security issues,” the Shenzhen-based super company has adopted a simple approach.

‘Cyber-security issues’

“Huawei has no connection to the cyber-security issues the US has encountered in the past, current, and future,” Ren, now 74, told the Chinese media in a rare interview five years ago.

But the assertions have resurfaced after his daughter Meng Wanzhou was arrested in Canada earlier this week over reported links to violations of sanctions imposed on Iran by the United States.

The 46-year-old chief financial officer and deputy chairwoman of Huawei faces extradition to the US, which could, in turn, derail a fragile trade war truce between Washington and Beijing.

Last weekend at the Group of 20 summit in Buenos Aires, American President Donald Trump signaled that a breakthrough might be achieved after his dinner date with China’s head of state Xi Jinping.

Since then, G20 euphoria has quickly turned into enmity after the state-controlled media’s rhetorical broadside following Meng’s arrest.

On Friday, the Global Times accused the US of “despicable hooliganism” while the China Daily said Washington was “trying to do whatever it” could “to contain Huawei’s expansion” because it was “the point man for China’s competitive technology companies.”

“The latest Huawei incident shows that we should get ready for long-term confrontation between China and the US, as the US will not ease its stance on China and the arrest of a senior executive of a major Chinese tech company is a vivid example,” Mei Xinyu, a research fellow with the Chinese Academy of International Trade and Economic Cooperation, said.

Legal battle

Still, these are dark days for the group.

In October, Huawei lost a long-standing legal battle over technology violations in the United Kingdom and could end up with a multi-million-dollar bill.

The case dated back to 2014 when Huawei was accused of patent infringements from Unwired Planet, a mobile data, software and services company based in Redwood City at the heart of Silicon Valley.

“The Court of Appeal on Tuesday dismissed the Chinese firm’s appeal, and stated that it should pay a global license fee for infringing Unwired Planet’s patents to avoid a sales injunction in the UK,” the Daily Telegraph, a major UK newspaper, reported on October 23.

“Huawei, already the subject of international scrutiny over its ties to the Chinese military, is now seeking permission to appeal the decision in the UK Supreme Court,” it added.

In response, a Huawei spokesman said:

“Irrespective of the ultimate outcome of the case, Huawei does not believe that the Court’s decision will adversely affect its business operations either in the United Kingdom or in other countries.”

While that might have been true six weeks ago, the jury now looks out on Ren’s high-tech creation after Meng’s high-profile arrest.

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