I have been patiently reading about and reporting on the growing international uprising against Huawei and claims that its core network technology is allegedly being used to spy on governments and corporations.
So what? China, or any other super-power (including the sacrosanct USA) hardly needs to build spying technology into core networks when they can, and do, use other means to get the same results. Ever since the Woodward disclosures on NSA activity by the USA, and the almost daily reports of major hacking of private and government websites and subsequent data losses, it has become apparent that everyone knows everyone else’s business anyway. Is this a case of people in glass houses throwing the first stone?
So why target Huawei?
The underlying message here is that countries fear 5G core networks supplied by Huawei could be compromised by some secret embedded code that would allow foreign governments (China by inference) to access a nation’s most secret data. Oh, and none of this is backed by any tangible proof that such secret code even exists – and even if it did, why would any government worth its salt not encrypt its most sensitive data?
Many commentators, including our own, have entertained the fact that this may all be politically motivated. President Trump’s ceaseless complaints of what he sees as an unfair trading situation with China could well be at the heart of this attack of ‘Sinophobia’. Blaming China for stealing jobs from the USA is laughable when you consider that it was America’s ruthless manufacturing moguls that first went to China with all their technology and plant because it was so much cheaper than producing in the USA. The fact that the Chinese were quick to learn and invest some of their newfound wealth in new technologies should have been considered an admirable capitalistic trait. After all, isn’t that what helped the USA rise to its dominant economic position?
Huawei, to its credit, started its rise by hiring telecoms experts that were retired or cast off by European and American equipment manufacturers after numerous rounds of mergers, consolidations, closures and mismanagement. Remember the glory days of Lucent Technologies, Siemens, Alcatel, Nokia and Ericsson. Where do you think the brains went to after they cut back?
I clearly remember visiting Huawei’s state of the art ‘campus’ in Shenzhen 20 years ago. Architecturally it looked like a European-inspired university staffed by European ‘professors’ imparting their knowledge to students and a company hungry to adopt Western ways. And boy, did they pick things up quickly. Huawei didn’t need to ‘obtain’ trade secrets using stealth, they came by employing the best people as advisors to nurture the smartest engineers China had to offer – and they had plenty to work with.
While the USA was fostering the dot.com boom (and subsequent bust) and Silicon Valley was investing in all things digital, Huawei was investing in network and handset technology. They were active in almost every standards body in the telecoms industry and were the largest contributors in developing and producing 3G, 4G and now 5G equipment.
Research and development key
As far back as 2014, Huawei invested a massive $6.6 billion (14.2%) of revenue in research and development (R&D). In 2015, $60 million was dedicated toward 5G technology. In July 2018 the company increased its annual spending on R&D to between $15 billion and $20 billion. About 80,000 of its employees, or 45% of its total workforce, are engaged in R&D. It runs 36 joint innovation centres and 14 R&D institutes and offices. Tell me what other network technology company invests so heavily in R&D.
And while Western network providers concentrated on keeping costs down and keeping stakeholders happy with dividends companies like Huawei and ZTE were aggressively investing in new markets considered to be high risk and low return by their competitors. Their subsequent dominance in the developing markets of Africa and Asia was met with charges of undercutting, low-interest loans and assisted funding at government level. Really not much different to the tactics employed by Western firms years before with the initial mobile network rollouts.
Who’s hacking who?
Constant press reports of hacking attacks on behalf of Chinese intelligence services are not helping Huawei and ZTE, but none of those reports to date have implicated either company. Yesterday’s report of an attack on Norwegian software firm Visma clearly points to a global hacking campaign by China’s Ministry of State Security, the equivalent of the USA’s NSA.
By inference, should countries not be checking network equipment supplied by Cisco, Juniper, Nokia, Ericsson and Intel, to name a few. Maybe the Chinese government should start spreading rumours about the security of network products from those companies or ban them from Chinese network rollouts. How would that be different to what the USA has done?
When researchers revealed security problems with chips from Intel and many of its rivals, sending businesses, governments and consumers scrambling to understand the extent of the threat and the cost of fixes, did the USA issue bans? And remember when Bloomberg Businessweek cited 17 unidentified intelligence and company sources as saying that Chinese spies had placed computer chips inside equipment used by around 30 companies, as well as multiple US government agencies, which would give Beijing secret access to internal networks – later proven to be false.
Even the latest US Department of Justice indictments including those allegations about breaching the Iran sanctions (something a number of countries have also been doing or are planning to do) and charges of obstruction of justice, wire fraud and theft of trade secrets have an unsavoury political smell about them. Not to mention the arrest of Huawei’s CFO in Canada at the behest of US authorities.
I guess the point I am trying to make here is that Huawei may be getting unfair treatment for becoming successful. The very definition of capitalism has been embodied in the company’s success – something the USA should be using as an example of how capitalism succeeds over communism. If there are legitimate reasons for banning Huawei or any other company from free-market trading by the USA or its blind followers then please give us some proof to support the claims.
The big test
Despite all the persecution and negative press, Huawei continues to be positive by continuing investment and marketing for its rather extensive range of products outside of core networks, and recording record profits. Those countries (including China) and companies that continue their relationship with Huawei are almost guaranteed to get the latest 5G network technology. We may well see developing markets benefiting at the expense of those in developed markets that are now having to swap out existing Huawei equipment and source new kit from other suppliers. We all know how long that process takes! It’s also heartening to see some of Huawei’s customers coming out in support.
Still, the question I have to ask is what has happened to the core value of being innocent until proven guilty? In the case of Huawei, it seems to be guilty until proven innocent.