Opinion | To win US credibility, Huawei needs to be transparent and show that it is not China’s mini-me

As a global corporation, Huawei’s opacity about its ownership and governance is earning it discredit. Even its ferocious work ethic is coming under scrutiny as a ‘sacrifice’ its foreign rivals would not have allowed

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Chinese President Xi Jinping (left) is being shown around Huawei’s offices in London by its founder Ren Zhengfei, in October 2015. One of the primary concerns about Huawei’s operations is its link to the Chinese state. Photo: Reuters

Published: 11:00pm, 23 May 2019Updated: 12:10am, 24 May 2019

At the height of escalations in the US-China trade dispute, United States President Donald Trump issued an executive order to effectively ban Chinese tech giant Huawei from selling equipment to US telecommunications businesses. Subsequently, the US Department of Commerce added Huawei to the government’s “entity list”, restricting the company’s access to US suppliers. Both decisions cited national security concerns.

Beijing was, unsurprisingly, not happy with this. In December, the Canadian government detained Huawei chief financial officer Meng Wanzhou in Vancouver as Washington suspected the company had violated US sanctions against Iran. In an obvious move of retaliation, China immediately arrested two Canadian citizens, Michael Kovrig and Michael Spavor, accusing them of espionage.

Huawei’s shady connections with the Chinese government and its key role in China’s 5G development may perhaps explain its significance in the trade war. But there is more to that: Huawei is a microcosm of the Chinese political system – a system the US is gradually losing patience with.

One of the primary concerns about Huawei’s operations is its link to the Chinese state. On paper, the telecommunications giant is a collective jointly owned by its founder, Ren Zhengfei, and its trade union; the company claims that only its employees – and certainly not the Chinese government – control Huawei.

But the company offers little transparency to support its claims. In a recent study, scholars Christopher Balding and Donald C. Clark find Huawei’s claim about its ownership structure rather misleading.

While a “trade union committee” claims 99 per cent of its ownership, the committee’s internal governance procedures remain a mystery to the public as members of the trade union have no control over its assets. “Regardless of who, in a practical sense, owns and controls Huawei,” the authors conclude, “it is clear that the employees do not.”