The Huawei dispute isn't about Huawei; it's about living with China

Giles Merritt questions the prejudices at the root of Western moves to exclude Huawei from ground-breaking telecoms research.

The tense, ill-tempered showdown now being waged by the Trump administration in the US and by several other governments against Chinese telecoms giant Huawei is about far more than ‘security’ and whether Beijing uses the company to spy. The significance of the confrontation with Huawei is that it will affect how business is done worldwide. Huawei’s treatment is a microcosm of Western countries’ future relations with China. The EU and its member states need to think very carefully about where they stand on Huawei’s involvement in future high-tech projects. The side they come down on will do much to shape the changing global marketplace and Europe’s place within it.There are lessons to be learned by all concerned. In China, those lessons include the dangers of how an opaque corporate culture can alienate public opinion. In the West, the challenge is to break free of the ignorance and prejudice that surrounds the rise of Asia’s new industrial champions.

Huawei is being labelled as an instrument of a potentially hostile communist regime that, if allowed to participate in the development of highly advanced 5G technologies, will worm its way into discovering Western companies’ innermost secrets. The smear is unconvincing.

Huawei is a far cry from China’s many state-owned enterprises. Founded in 1983 by Ren Zhengfai, a lowly engineer made redundant by the People’s Liberation Army, its meteoric rise has transformed it from a trader in second-hand Hong Kong telephone switchgear to a global ITC corporation approaching $100bn yearly sales in 170 countries. And thanks to a stock option scheme introduced in 1997, about half its 170,000 employees are shareholders. 

This doesn’t guarantee that Huawei would never spy. What makes it increasingly unlikely, though, is the rapid pace at which Asian scientists are catching up with and even overtaking Western boffins. When Accenture consultants surveyed top European CEOs, the consensus was that by the early 2020s, China will have drawn ahead on key innovations.

Why is public opinion so ready to believe the worse, not only of Huawei, but of Chinese businesses in general? One reason may be that Chinese senior management misunderstands the nature of Western public relations. Huawei has been a case in point, not least here in Brussels.

Five or more years ago, Huawei launched a strategy to show it is a ‘good European’. This ranged from financial support for EU-related activities – including those of Friends of Europe and other think tanks – to a variety of image-burnishing projects. What it didn’t include was access for European journalists and opinion-formers to Huawei’s top executives. The strategic thinking of the corporation has stayed behind the closed doors of its Shenzhen HQ in southern China. 

And that, in a nutshell, is the problem that underlies Huawei’s difficulties and is souring China’s relations with countries that are both customers and its competitors.

If global markets are to be developed to the advantage of the developed West and fast-developing Asia, attitudes need to be rethought on both sides. Europe and North America must recognise Asia’s growing technological prowess and stop branding Chinese corporations as cheap copycats. Half of the world’s ten largest civil engineering and construction groups are now Chinese.

As to China and other Asian nations, it’s time for some major mindset shifts. That won’t be easy when the US president speaks of trade war victories, but China should soften its hard competitive edge and start to see the world economy as more than a zero-sum game with winners and losers. The 21st century’s threats are universal.