[China] Yoshida in China: Going public would demystify Huawei

Beijing is crying foul in the aftermath of a congressional report that virtually places China’s Huawei and ZTE on a blacklist.


State-controlled China Daily has led the charge with stories like “Huawei, ZTE hit back at ‘biased’ US market report,”  “Protectionism behind groundless US accusation,” and “China ‘strongly opposes’ US report on telecom firms.” A Commerce Ministry official is quoted in one story denouncing the U.S. report as “subjective guesswork” filled with “untrue evidence.”


The outcry from China should surprise no one. After all, Huawei is the pride of China.


The Shenzhen-based telecom equipment maker was founded in 1987 by entrepreneur Zhenghei Ren, initially serving as a sales agent for PBX switches made by a Hong Kong company. Unlike other stodgy state-owned enterprises in China, Huawei has remained nimble and aggressive, and has doggedly pursued its own global expansion strategy. Huawei has partnerships and R&D centers in the U.S., the U.K., Germany, Sweden, India, Russia and Turkey.


During an early 2000 press tour, I can recall visiting the Invest in Sweden Agency in Stockholm and hearing Swedish officials talking about a much anticipated visit by Huawei..


At the time, I didn't know Huawei. Swallowing my pride, I asked the Swedes, “How do you spell Huawei?” One shot me a look, incredulous that I didn't know the rising Chinese telecom company. I certainly deserved that look. (Huawei eventually opened an R&D center in Stockholm.)


Since then, I've watched Huawei growth with amazement as it captured 20 percent of the global market for telecom equipment. Huawei is considered a Cinderella story in China, and I agree.

I find it curious that Huawei, a major player in the global telecom equipment market, remains as a private company.


Military link?


 It is widely known that Huawei’s founder Ren is an ex-People’s Liberation Army officer. While some view that fact alone as sufficient evidence to suspect a clear link between Huawei and the PLA, a larger question is who really "owns" Huawei. The company claims to be employee-owned.


 A friend working for a Beijing semiconductor company explained to me over lunch: “Huawei hasn’t been able to go public because their financial book is such a mess.” We haven't been able to confirm that, but looming large is Huawei’s lack of transparency.


 Since much of the evidence in the House Intelligence Committee's report on Huawei and ZTE is classified, it’s hard to blame the Chinese media for alleging U.S. protectionism. Still, it's not unreasonable for the U.S. to remain cautious. After all, as concerns mount about cyber warfare, why should you go out of your way to do business with companies who aren't even listed on the New York or London stock exchanges?


 Wouldn't you rather work with a public company, especially on big telecom equipment deals for next-generation networks? Huawei has hired a slick U.S. spokesman to defend its reputation, but going public would do more to solve some of Huawei's transparency problems.


Source: EETimes