Huawei founder and CEO Ren Zhengfei. Photo: handout

For a media recluse, billionaire Ren Zhengfei appears to have developed a soft spot for the press. In the space of 48 hours, the founder of Huawei talked for the second time about the controversy surrounding his sprawling telecom conglomerate.

On Thursday, his audience was made up of Chinese reporters at the company’s campus in Shenzhen after answering questions from international journalists earlier in the week.

Dressed in an electric blue jacket, Ren again denied allegations that Huawei was involved in technology theft and spying.

He also stressed that the group was prepared to meet the challenges of the future head-on.

“The few politicians [in the United States] who make [a] noise do not represent US society,” Ren said. “I believe US industries, enterprises and technology sectors firmly support us and seek greater cooperation with us.

“[But] we anticipated the problems that Huawei might encounter a dozen years ago, [so] we are not totally unprepared for the current situation,” the 74-year-old added. “The outside world is worried about me, but you see, I am happy every day, sleep and eat as usual.”

Still, the trade war between the United States and China has opened a Pandora’s Box with technology a key battleground in the rivalry between the world’s two largest economies.

At the center of the row has been Washington’s stand on intellectualproperty infringements, cyber theft and Beijing-backed state subsidies. The “Made in China 2025” plan has also been singled out by US President Donald Trump.

Since Huawei is the poster child of this ambitious program, the company has been caught in the crossfire.

“[We] now have 87,805 patents, of which 11,152 core patents were granted in the US,” Ren said at the media conference. “Our technology patents are valuable to the information society of the US,” he added.

Founded in 1987 with 21,000 yuan (then US$4,400) of his own money, Ren has turned the family business into the world’s largest manufacturer of telecom equipment with 180,000 employees.

Digital infrastructure

Specializing in digital infrastructure, Huawei will be crucial to the success of the “Made in China 2025” policy. This will encompass the Internet of Things and interconnected smart technology linked through artificial intelligence, or AI, and delivered by super-fast 5G networks.

“The Made in China 2025 initiative, has caused deep resentment among American companies and their counterparts elsewhere,” Cheng Li, the director of the John L. Thornton China Center, and Diana Liang, a research assistant, wrote on the Brookings Institution website, in November.

“They have called these practices ‘state capitalism,’ in opposition to fair market competition,” they added.

Beijing does not see it that way, and neither does Huawei, but concerns persist.

Allegations that the conglomerate violated sanctions imposed on Iran by the United States led to the arrest in Vancouver last month of Meng Wanzhou, the chief financial officer and Ren’s daughter.

As the case drags on, she could face extradition to the US. “I call her frequently and tell her jokes to relax,” Ren said. “She is very strong.”

Last week, another executive was arrested. This time it involved espionage accusations in Poland. But unlike the Meng saga, authorities announced that the investigation was limited to employee Wang Weijing, who has since been fired, and not the company.

To add to the spate of negative news for Huawei, Ren’s creation has come under intense scrutiny about cyber-security and perceived links to President Xi Jinping’s government.

Already countries such as Australia, New Zealand, Japan, the United Kingdom and the US have restricted market access. Germany could join them, according to media reports.

Again, these allegations have been denied.

“Huawei has no connection to the cyber-security issues the US has encountered in the past, current, and future,” Ren said.

A camera crew waits outside the Vancouver home of Huawei CFO Meng Wanzhou, who is also the daughter of founder Ren Zhengfei. Photo: AFP / Jason Redmond

Yet, on Wednesday, it was revealed that the US Department of Justice had launched an investigation into the company. This is believed to involve the alleged theft of trade secrets.

“The probe is at an advanced stage and could lead to an indictment soon,” The Wall Street Journal quoted sources as saying, adding that the inquiry stemmed from an earlier civil case brought by US telecom firm T-Mobile.

Significantly, Huawei has become the latest major Chinese tech conglomerate to be targeted after domestic rival ZTE was denied access to crucial US components for breaking a sanction-busting agreement relating to Iran. Left crippled, it nearly folded before a deal was hammered out.

“The whole world is very clear that the real intention of the United States is to use every possible piece of state machinery to suppress and smear China’s high-tech companies,” Hua Chunying, a spokeswoman for the Ministry of Foreign Affairs, said when asked about The Wall Street Journal report on Thursday.

Less than 24 hours later, the outcry continued when Huo Jianguo, a research fellow at the influential Chinese Academy of International Trade and Economic Cooperation, compared the investigation to high-tech McCarthyism.

He accused the US of “politicizing normal business disputes” and insisted it was another ruse by Washington to curtail China’s global ambitions, especially in 5G technology.

“The US side is likely to be unsatisfied with the ongoing China-US trade negotiations, so it needs to seek different ways of suppressing China,” Huo told the state-run Global Times.

“Apparently, Huawei has been growing into a tech giant that could challenge other foreign players in the telecoms sector, which motivated the US government to curb its further growth,” he added.

The rollout of 5G across countries involved in the grandiose Belt and Road Initiative was seen as another golden opportunity for the company. But, so far, it has become a political minefield.

Financial muscle

These ‘New Silk Road’ superhighways will connect China with 68 nations and 4.4 billion people across Asia, Africa, the Middle East and Europe in a maze of multi-trillion-dollar infrastructure projects, including a web of digital links.

“Do we have to be worried about Huawei and other Chinese companies? Yes, I think we have to be worried,” Andrus Ansip, the European Union’s vice-president for a digital single market, said when asked about cyber-security.

Ren was more sanguine when he discussed the subject this week.

“It’s always been the case, you can’t work with everyone … we’ll shift our focus to better serve countries that welcome Huawei,” he said.

But then, the group has financial muscle. Last year, revenue topped $108 billion and is predicted to rise to $125 billion in 2019. Profits in 2018 hovered around the $9 billion mark with the help of a highly-competitive consumer division and robust smartphone sales.

“Five years [from now], the annual revenue is likely to be more than double today’s number,” Ren said.

Moreover, investment in research and development has soared.

In 2017, Huawei pumped more than $13 billion into R&D, which was 14.9% of its total revenue, the conglomerate’s website stated. Last year, it was between $15-to-$20 billion, Ren pointed out.

Those eye-watering numbers lifted the group into the top five of the world’s leading 50 companies for R&D investment in 2018.

“Science and technology are the commonwealth of humankind and we should stand on the shoulders of precedents to advance ahead. That way we can bridge the distance we have with the world’s best,” Ren said during the 90-minute interview with the Chinese press.

For a media recluse, he certainly knows the difference between terabytes and sound bites. Yet, it is open to conjecture if they will placate his critics.

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