Can Huawei survive? Wrong question!

It is the season of debates in the U.S. which in reality is an odd mix of shouting matches, ill-mannered behavior and dodging critical questions. In the midst of this, I received an invitation from Elise Quevedo to watch an interesting debate online about if Huawei can survive, despite the many challenges the company faces around the world. My friend and fellow countryman Edwin Diender wrote me as well, telling me that he was really looking forward to this.

When Elise invites for a party, I show up because I know that there is always action. And when Edwin recommends it, I even put on my virtual dancing shows. My only question was if Elise would be able to succeed where professional moderators in political debates fail completely: make it a cultivated conversation with all the pros and cons. Was I in for a pleasant surprise!

Pros and cons ushered with respect for the others, facts and opinions clearly identified. Warren Whitlock so tight up in his U.S. vs. China argumentation that he forgets to mention the European Union as a major player and powerhouse. Emre Alkin throwing a controlled fit full of passion when he feels that Turkey is not represented properly. Cyrus Janssen duly pointing out the anti-U.S. and anti-China sentiments because of this trade-war and slander campaign and in doing so also forgetting the EU. And last but not least, Andy Mok arguing that co-existence is the only option and also leaving out the EU. Yes, this debate had it all (except for the EU) and on top of that, manners and mutual respect!

And yet I believe that an important segment was left behind in this otherwise very interesting debate. The truth and lies about Huawei. So, let us take out the shovels and do the dirty work ourselves. There are 3 main myths or truths based on which this U.S. administration is trying to convince the world, and maybe even itself, that Huawei is a danger to our society and should be banned.

  1. Is Huawei a pawn of the Chinese Government?
  2. Is Huawei financed and owned by the Chinese Government?
  3. Is Huawei involved in espionage by the Chinese Government?

Is Huawei a pawn of the Chinese Government?

This argument is mainly based on Huawei’s founder Mr. Zhengfei being a member of the communist party and having served in the Chinese military. When serving in the military is a security risk, I have some bad news for basically everyone from my generation and a couple of generations before and after me. Most countries had (and some still do) mandatory service aka conscription for all young men so they are all a security risk? And most countries offer programs which attract young women and men to join the military, receive education and something as important as a paying job!

Mr. Zhengfei did as a teenager what most young men did around the world and not just in China. Join the military, get an education and a job. Keep in mind that this was almost 60 years ago and not in the booming economy China is seeing today. A time where education and jobs were not as ‘normal’ as they are today in most countries. When that is reason enough to be considered a threat, there is a long list of threats…  The superrich investor and Chelsea owner Roman Abramovich served in the Soviet Army, and had close ties to Mr. Yeltsin and Mr. Putin, both well-known members of the Communist Party until its collapse. Is he a threat, too? Well, at least Mr. Trump is safe. Apart from flipping his loyalty to political parties like a revolving door, he dodged his duty to his country like so many other privileged kids have done when the U.S. still drafted their youth for war.

Becoming a member of the ruling party was not an easy journey for Mr. Zhengfei. He was even barred during his first years in the army. But he made it eventually, and that is something to be very afraid of, apparently. So, let us start fearing Dr. Angela Merkel who demonstrates true leadership during this pandemic and most of her career, because she joined Eastern Germany’s communist party as a youngster. Wait, she is not Chinese. Jack Ma, let us pick on Jack Ma because he is a member and Chinese, right?

This is all politically motivated nonsense which does not fall short of “Project Fear” the world had to endure during the Cold War. When party affiliation is a problem, let us have a look at all the businessmen affiliated with the current U.S. administration because we get the impression that they are not doing so well on human rights, healthcare during a global pandemic, eliminating poverty, inclusion and equal rights for women and minorities, sustainability and the environment…

Cynical comments aside, it is not possible to start a company in any country without following the rules of that country. It is not possible to build a career without a network. You go with the flow and work within the system but that does not make you a pawn of any government, nor a threat to society!

Is Huawei financed and owned by the Chinese Government?

This is a persistent rumor, and it is designed to explain the rapid growth and unprecedented investments in new technology by Huawei. Bad news for the fanboys of this myth comes from KPMG as the auditor of Huawei’s annual reports and filings. Huawei is entirely owned by its employees in a so-called Employee Stock Ownership Program, how communist of them… The bad news coming from KPMG continues by clearly stating that the Chinese Government does not hold a single share in the company.

What about those illegal financing routines through which Huawei is able to outrun its competitors worldwide? Those rumors must be true, right? How else could Huawei be able to invest so much in 5G, AI, Cloud, Renewable Energy and all at the same time? Damn, KMPG destroyed that myth, too. The incentives, repayable loans and subsidies Huawei receives on for example renewable energy are similar to those of its competitors.

This cannot be true, where does Huawei get the cash to invest so much if all this is legal, right? There are some very distinct differences between Huawei’s way of doing business and your average off-the-rack U.S. multinational corporation. For example, Huawei does not have this typical 1% Executive Suite, where the top 1% layer of leadership makes more money than the remaining 99% of the company combined. And they also have the benefit of mainly producing in Asia where manufacturing costs are still significantly lower than in the rest of the world, especially in the U.S. But the real reason behind Huawei’s ability to constantly increase its investments in developing new technology is that Mr. Zhengfei made it the most important rule in the company. From day one! Huawei does not operate to pay out its investors or to impress the stock markets. Huawei operates to create value. How communist of them…

Now that we have mentioned state ownership and state funding, it appears that some of the players using this argument should have a closer look at themselves before they start pointing fingers at others.

*cough* Boeing *cough*

The U.S. uses accusations of state funding as a revolving door to slap tariffs and sanctions on countries where companies take market leadership over U.S. corporations. It slapped tariffs on the European Union over state funding and subsidies of Airbus only to find itself caught with its pants down (sorry for this disturbing mental image) over state funding and subsidies of Boeing. Tesla gets a chain of incentives on its products and supply chain, and their customers continue to get tax incentives on charging the products. Which is great because it is a leap-jump forward to protect our damaged environment, but it is still state funding.

Now that bailout programs are as common as growing infection rates during this pandemic, we might as well want to drop this argument from the list entirely, don’t we… Fact remains however that independent sources have confirmed over-and-over again that Huawei is neither state-owned nor state-financed.

Read Part 2

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1 thought on “Can Huawei survive? Wrong question!”

  1. Pingback: Can Huawei survive? Yes but how much damage to the economy will be done… | Dr. ir Johannes Drooghaag

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