The West guards its backdoor to keep the Huawei ‘wolves’ out
The Chinese telecoms giant has raised suspicion around the world with its so-called ‘wolf culture’
As the strains of Vivaldi blast from the train loudspeaker, a pair of red carriages pull out of the station and past a stunning panorama of European architecture.
Gothic spires and a towering castle with elaborate arches give way to a picturesque lake where children play.
In the distance, the honey-coloured stone and pitched roof of a French chateau looms under a crisp blue sky.
It may sound like a fairytale landscape somewhere north of the Alps. But this is Dongguan in southern China and none of the buildings are more than two years old.
Here at Huawei’s sprawling new research campus, China’s biggest private company is building a grand new home fit for its future.
With space for 23,000 employees, its own railway, cafés and a station named after the Arc de Triomphe, there is no shortage of ambition.
But perhaps that’s no surprise. Founded by billionaire former military engineer Ren Zhengfei, Huawei, the world’s biggest manufacturer of telecoms equipment, generated sales of over $100bn last year and spent $15bn on R&D – more than Apple and surpassed by only four other companies globally.
But the 74-year-old tycoon’s decision to build a miniature recreation of Europe here in the Pearl River Delta may be good timing.
As Huawei limbers up for what could be its most lucrative opportunity yet – the rollout of next-generation 5G telecoms networks around the world – several of the countries depicted here are proving a tougher nut to crack than planned.
Amid mounting US political pressure, trade tensions and the arrest of Ren’s daughter, Meng Wanzhou, in Canada amid allegations Huawei kit might be used for espionage, the company has become a lightning rod for Western unease at China’s growing economic and technological prowess.
In Germany, authorities are examining stricter scrutiny of providers including Huawei for its rollout of 5G, a technology that will enable innovations from remote surgery and connected homes to autonomous cars.
France’s biggest mobile operator, Orange, in December ruled out Huawei for its own 5G network.
Even Britain, the first big Western market to open its doors to Huawei 15 years ago, has cooled its reception.
BT plans to strip Huawei kit from parts of its core 4G network, while a joint evaluation unit formed by UK security officials has flagged concerns over vulnerabilities in its software.
This month, Gordon Sondland, US ambassador to the EU, didn’t mince his words, citing suspicions that “backdoors” for eavesdropping could be built into equipment produced by Huawei, a private company owned by 88,000 current and former employees.
“Those who are charging ahead blindly and embracing Chinese technology without regard to these concerns may find themselves in a disadvantage in dealing with us,” he said, in a thinly veiled threat: US allies who install Chinese gear may suffer consequences.
Over at Huawei’s lush headquarters in the buzzing Chinese technology hub of Shenzhen, senior officials dismiss such talk as nonsense.
With no US firms on the list of major 5G suppliers, they see criticism as a crass exercise to smear Huawei's reputation as Washington seeks to ratchet up pressure on Beijing in a trade war.
“Some politicians have turned 5G and cybersecurity into a political or ideological discussion,” says Eric Xu, one of Huawei’s three rotating chairmen.
He plays down the significance of efforts to ban Huawei by the US, Australia and New Zealand, adding: “I believe technology is technology ultimately and ... scientists and engineers would prefer better products.”
US concerns should be seen in the context of waning American leadership in the technology, he claims, insisting that allegations of “backdoors” and links to Chinese spy agencies are simply untrue.
Huawei is a private company with no direct links to the state, he says.
With 180,000 staff, 45% in R&D, there is no denying the scale and sophistication of Huawei’s operations. From base stations to antennas, smartphones to tablets, the company’s products are already being used by three billion people in 170 countries, and have been absorbed deep into the networks of 45 of the world’s 50 top carriers.
With 1,970 patents in 5G, Huawei, which has pumped $60bn on R&D over the past decade, is some way ahead of the nearest competition.
Finland’s Nokia, LG of South Korea and Ericsson of Sweden are lagging some way behind with 1,471; 1,448 and 1,444 patents each.
Huawei has already signed 26 5G commercial contracts and has been setting up more than 10,000 5G base stations.
Dr Zhou Yuefeng, head of Huawei’s 5G business, agrees: “The leadership that we have in 5G may cause some over-concern from certain parties.”
Founded in 1987 by Ren as a Shenzhen-based importer of telecom Switchgear from Hong Kong, Huawei has adroitly surfed the wave of China’s extraordinary economic boom.
A Communist Party member with links to China’s leadership, Ren gradually moved into the manufacture, design and export business and shifted steadily up the value chain.
Starting with emerging markets in Asia, Latin America and Africa, Huawei has steadily won more contracts in key Western markets too.
But its rapid growth – with revenues up 21% in 2018 alone – has not come without controversy.
An aggressive spirit of long hours and relentless expansion has been nicknamed a “wolf culture” by some.
It’s a reputation that was not helped when the US department of justice last month unsealed a 10-count indictment alleging the company conspired to steal intellectual property from T-Mobile, and a string of other abuses. Huawei denies the charges.
In recent years it’s not just telecom network gear where Huawei has been making rapid inroads.
Sales of Huawei smartphones in China soared by 23% in the fourth quarter of 2018. Apple’s iPhone sales fell 20% over the same period.
In a pristine smartphone manufacturing plant at the Songshan Lake hi-tech park back in Dongguan, a bank of robotic arms are printing circuit boards on a production line for brand new P20 phones.
Every 29 seconds, a new phone worth R14,000 is spewed out from an almost fully automated 120m-long production line to be collected in trays by robots.
Wang Jin, director of Huawei’s Independent Cyber Security Lab, insists the security concerns around Huawei are unfounded.
“We embed cybersecurity into our processes so they never come above commercial interests. Huawei exercises backdoor control more strictly than any other peer in this industry.”
But Xu warns against complacency in its fight to shake off Western suspicions of the company.
He cites the relationship with UK security agencies including GCHQ, which in 2010 formed a cell to jointly evaluate the security risks posed by Huawei equipment, as a model for other countries to follow.
In January, Ren wrote to all staff to announce plans to rewrite all of the company’s source code – the most basic elements of its software – to satisfy cybersecurity concerns.
Xu likens the need to upgrade the source code to improving the standards in a Chinese restaurant.
He said: “You have all tried Chinese food and ... found it delicious. But you won’t know which practices the chef follows if you don’t check the kitchen. [Rewriting the source code] is about going in and setting a whole set of procedures and guidelines. If the chef doesn’t follow certain steps the food won't be as tasty.”
Ultimately, Xu believes Western criticism of Huawei will be exposed as unwarranted and politically motivated.
“I believe in the wisdom of the world’s seven billion people. They can clearly see those possibilities.”
– © The Sunday Telegraph