An investor reacts near boards displaying stock market prices in Beijing, China, Thursday, Dec. 6, 2018. Image Credit: AP

What is Huawei?

Huawei is a telecommunications and electronics company based in Shenzhen in the south of China. It is also the world’s largest telecoms equipment firm. In August, it overtook Apple to become the world’s second-largest smartphone seller behind Samsung. In the second quarter of 2017 the Chinese company sold 54.2 million phones, making up 15 per cent market share. Though its phones are popular all over the world, Huawei has been blocked by several countries from being involved in supplying equipment for the rollout of 5G networks, with governments citing national security fears.

How did the company become so successful?

Huawei, with more than 180,000 staff and revenue of $93 billion (Dh342 billion) in 2017, started off selling digital telephone switches in the 1990s, and was known for drastically undercutting rivals on price. It was a pioneering supplier of telecom gear at a time when China was spending heavily to upgrade its networks, importing much of its equipment. Competitors branded Huawei a cut-rate vendor of copycat equipment, and companies including Cisco Systems and Motorola filed lawsuits over alleged trade secret theft. But Huawei spent heavily on research and development and is now regarded as a global leader in key telecom network technologies and high-end smartphones. In contrast, its major western rivals, Nokia and Ericsson, have struggled financially in recent years.

180000


total number of employees currently working with Huawei

Who has blocked Huawei?

Already the governments of the United States, New Zealand and Australia have moved to block the use of Huawei’s equipment in the rollout of future 5G networks. Similar moves are under consideration in the United Kingdom, while telecoms provider BT has just confirmed it is removing Huawei equipment from key areas of its 4G network, amid concern from MI6 about Chinese firms’ presence in such infrastructure. US regulations were announced in April that banned government companies buying from any company deemed a security threat, which was thought to be a way of blocking purchases by Huawei and another Chinese manufacturer, ZTE. In July, the US lifted the ban on ZTE as part of a settlement in which the company paid the US Treasury a $1billion penalty.

What are the US concerns?

US authorities in 2016 began voicing concerns that Huawei and others could install back doors in their equipment that would let them monitor users in the US. Huawei has denied those allegations. The Pentagon stopped offering Huawei’s devices on US military bases citing security concerns. Best Buy, one of the largest electronics retailers in the US, also recently stopped selling Huawei products. In August, US President Donald Trump signed a bill banning the government’s use of Huawei technology based on security concerns. The US, which believes Huawei’s equipment can be used for spying, is contacting key allies including Germany, Italy and Japan, to get them to persuade companies in their countries to avoid using equipment from Huawei.

What are the concerns over Iran sanctions violation?

In 2016, the US Commerce Department sought information regarding whether Huawei was possibly sending US technology to Syria and North Korea as well as Iran. The US previously banned ZTE, a Huawei competitor, for violating a sanctions settlement over transactions with Iran and North Korea. US authorities have been investigating Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.

$93b

total annual revenue earned by Chinese manufacturer Huawei in 2017

What are governments worried about?

Huawei is a private company. However there are fears it and other Chinese manufacturers can be compelled by the Chinese security services to help with intelligence gathering. The national intelligence law passed this year requires all organisations and citizens to assist the country’s spy agencies. Speaking after Australia announced Huawei and ZTE would not be allowed to participate in the 5G rollout, the country’s spy chief said Huawei had been banned because it was a “high-risk vendor”. Mike Burgess, who is director-general of the Australian Signals Directorate, said the 5G network would underpin the country’s water supply, electricity grid, health systems and even self-driving cars, and so breaches due to “high-risk equipment” needed to be guarded against.

What does China say?

The Chinese Embassy in Canada released a statement following the arrest of Meng Wanzhou, saying China “firmly opposes and strongly protests over such kind of actions, which seriously harmed the human rights of the victim”. “The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms Meng Wanzhou,” it said. The editor of China’s often stridently patriotic state-run tabloid, the Global Times posted on Weibo: “It is clear the US is pushing the battle line to our door ... We can completely regard the US arrest of Meng Wanzhou as a declaration of war against China.”

— Guardian News & Media Ltd