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Huawei hits limits of China's transparency toolkit

Reuters

By Christopher Beddor

(The author is a Breakingviews columnist.)

HONG KONG, Jan 16 ( Breakingviews) - Huawei is hitting the limits of China's transparency toolkit. The embattled tech giant's founder Ren Zhengfei gave a rare interview to distance itself from the state. But as compatriot HNA found, traditional means to demonstrate an innocent agenda are no longer effective for high-profile companies in the Middle Kingdom.

Such timely reassurances from foreign companies would typically soothe anxious governments but Huawei's increased effort comes far too late, for a start. It is reminiscent of HNA's unusual decision in 2017 to unveil a new ownership structure, just as Western banks and regulators probed the aviation-to-finance conglomerate that had already been on an aggressive multi-billion dollar acquisition spree. Like Huawei, HNA also faced questions about the exact nature of its relationship to the Chinese government.

It's a reminder that it's hard for any company to quell fear once it has taken hold. The more profound issue for Huawei is suspicions about the hardware giant are now so deep-rooted, there's probably little by means of conventional tactics it can employ. The U.S. government's aversion to the company has been steadily building for nearly a decade. This anxiety hinges on fundamental issues such as strategic trust, rule of law, and the relationship between Beijing and its tech champions.

Even the most earnest corporate drive toward radical transparency could not, for instance, fully mitigate Western worries that Chinese intelligence services might one day call on the firm to attempt to collect or hand over sensitive information. New solutions are needed to set a template for how Western countries can securely accept the proliferation of Chinese technology. They will have to come from policymakers, not executives.

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- Huawei founder Ren Zhengfei said on Jan. 15 that his company had never "received any requests from any government to provide improper information," according to an interview transcript provided to . "I still love my country. I support the Communist Party of China. But I will never do anything to harm any other nation", he said.

- "We will learn from Apple. We would rather shut Huawei down than do anything that would damage the interests of our customers in order to seek our own gains", Ren added, citing its U.S. rival.

- Canadian authorities in December arrested Meng Wanzhou, Ren's daughter and Huawei's chief financial officer, at the behest of U.S. officials. Meng is alleged to have misled banks about the company's control of a firm operating in Iran, a country subject to U.S. sanctions.

- A Chinese court on Jan. 14 sentenced a Canadian man, Robert Lloyd Schellenberg, to death for drug smuggling. Schellenberg had appealed his initial 15-year prison sentence for the offense. Canada's Prime Minister Justin Trudeau accused Beijing of arbitrarily applying the death penalty.

- For previous columns by the author, customers can click on


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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