The U.S. and Australia have made clear their distrust of one of the world’s biggest telecoms companies. But their lack of transparency over their concerns does no one any favors.
China-based Huawei Technologies, the world’s second-leading producer of telecommunications equipment, received yet another blow to its image this month when the Australian Financial Review reported that Australian officials told company executives in late 2011 that Huawei wouldn’t be allowed to invest in the country’s $38 billion National Broadband Network (NBN). The NBN, which aims to connect 93 percent of Australian homes to high-speed internet, is Australia’s largest infrastructure project and has welcomed bidding from both domestic and international companies – except, apparently, Huawei.
Why the resistance to allowing Huawei, already a large investor in the commercial telecom industry in Australia, into the NBN? Prime Minister Julia Gillard evasively explained that the decision was made to “[stand] up for Australia's national interests.” What Gillard’s vagueness reveals above all is the difficulty Huawei has convincing the world it is trustworthy, and the equal difficulty foreign governments have explaining why it isn’t.
This isn’t the first run-in between Huawei and a foreign government attempting to protect what it sees as national interests. The United States has been at the forefront of efforts to check Huawei’s penetration into national telecom networks. The U.S. Committee on Foreign Investment prevented the company from acquiring U.S. telecom companies 3Com and 3Leaf in 2009 and 2011, respectively, and the U.S. commerce secretary reportedly intervened in 2010 to block Huawei’s involvement in a contract to supply equipment to Sprint. Late last year, U.S.-based Symantec broke off a profitable four-year partnership with Huawei, allegedly over fears that it could lose corporate customers fearful of Chinese hacking and cyber espionage.
The nail in the coffin for the NBN deal seems to have come from Huawei’s recent troubles in the United Kingdom. As reported in The Australian, the Australian government cited recent revelations that the British intelligence services "felt compelled to put in place an expensive and resource-intensive auditing structure in order to ensure that Huawei didn’t steal state secrets" after it was allowed to provide equipment for a large broadband project. This came in spite of BT, the U.K.’s largest telecom provider and lead in the project, insisting that it was allowed to check all of Huawei’s contributions for security threats and that the relationship was “managed strictly in accordance with UK laws and security best practice.”
The contradiction between BT’s statements and the British government’s actions are a common theme for Huawei. The company is, ostensibly, employee-owned, and no evidence has ever been put forth publicly linking it to cybercrimes, espionage, or direct control by the Chinese government. Yet suspicions persist. Huawei’s founder, Ren Zhengfei, was a deputy director in the Chinese People’s Liberation Army’s engineering corps before establishing the company. Its meteoric expansion was largely underwritten by enormous government-backed loans, and the transparency of its funding and management operations has consistently fallen short of international best practice.
Australian National University’s Desmond Ball insists there’s “no doubt” Huawei is involved in cyber espionage, and New Zealand-based security analyst Paul Buchanan says the notion that Huawei is truly independent of the Chinese government is “ludicrous.” Yet the company has succeeded in gaining entry to government-backed projects throughout the world, including in New Zealand’s ultra-fast broadband (UFB) project in Christchurch and central North Island. Dismissing cyber security fears, New Zealand Prime Minister John Key has said all aspects of Huawei’s involvement in the UFB were carefully considered and that his government is “comfortable with the current arrangements'” with the company.
Huawei spokesman Jeremy Mitchell responded to the Australian government’s decision with disappointment, saying the company “will continue to be open and transparent and work to find ways of providing assurance around the security of our technology.” But if one thing is clear from Huawei’s recent run-ins, it’s that more transparency is precisely what the company needs most. State-owned enterprises and “national champions” play an inordinate role in China’s economy. This means that, if Huawei really is a private entity free of government control, then the onus to prove it rests with the company. It isn’t enough to say that Huawei’s subsidiary operations in Canberra or Auckland are open and transparent; the same must be true of its business in Shenzhen and Beijing.
At the same time, Australian, U.S., and European governments must be more forthcoming with the reasons for their distrust. As New Zealand analyst Buchanan admits, there’s absolutely no damning evidence against Huawei in the public domain, only rumor and accusation. This leaves Huawei with ample reason to complain that it is being unfairly targeted. It also leaves governments and companies in the position Sprint found itself in last year: desperate to engage in profitable business with Huawei, worried that such business could backfire, and unable to make an informed decision either way.
Uncertainty and distrust help no one, and Australia and its allies should be working to ease them, not make them worse. If there’s evidence against Huawei, it should be presented without compromising national security. It might be impossible for Huawei to completely allay fears without going public, which it has so far proven unwilling to do. But in the meantime, Australia, the United States, and their allies should set an example of transparency, not obfuscation.
Gregory Poling, Research Assistant, Pacific Partners Initiative, CSIS. This article originally appeared here.
Photo Credit: Brücke-Osteuropa
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HHop
Are you still buying Chines-made ANYTHING? Ask yourself and all of the people you know.
arielus
Washington and her lackeys spread their poison in order to create hate in this world. Their American jingoism and selective protectionism are to the extreme and fanatical. Pity Hua Wei is caught in their madness and lunacy.
a_canadian_observer
No, we’re not. There’s a strong but quiet movement here in Canada to stay away from chinese made products. And, this is even better: even immigrants from china do so.
william
It seems like what they (western governments) can do what they want without transparency or good reasons in blocking sales or denying a Chinese company basic rights as in democratic and capitalist free market economies. If the same thing were to happen in China say blocking a major takeover buy a western company, the headlines all over would have been jammed with insults and word like “undemocratic”. “unfair”, “communist regime”, “central Governments’ hand”. “basic human rights denied” etc. I mean American and western companies are even complaining of their “indigenous design preference” which i could see no wrong. Americans can also prefer their own technologies over foreign ones in contract awards, whats wrong with that. But here is another perfect example of unfair trade practices by some very “democratic and free market” governments. What do you say?
Orwell
Several Canadian cell carriers use Huawei’s trojanized, back-door-infested hardware because it’s cheap; consumers should boycott these carriers. The Canadian government should learn from their American and Australian brothers, I wish they would protect their citizens from Huawei.
John Chan
@Orwell,
Do you mean Canadian cell carriers are so incompetent that they don’t know what they are doing? Canada was the first nation in the world in software privacy in case you don’t know anything about.
Apply locks its software from day one. Canada was the best and first in the world to produce software to break those locks. Anybody doesn’t want to be pay Apple’s rip off prices, he must pay Canadian for the law breaking tool first; just like in the Prohibition time, Canada made tons of money by selling bootleg liquor to the American alcoholic addicts.
Canadians pay highest internet and cell rates in the world with lousiest technologies, because Canadian government gives enclosed market to those few carriers. Indeed Canadian government should learn from the USA and Australia to get rid of the shield it provides to those greedy carriers, open up the market, so Canadian can catch up the world in cell and internet technologies and without being ripped off by those greedy and incompetent carriers.
a_canadian_observer
@John Chan:
To your first paragraph: It’s not a question of competence, but we in the west are used to arbiding by the business code of conduct. china came into the picture and brought with it the deception, sneaky business practice plus stealing and sabotage that we didn’t anticipate (i.e., didn’t expect people to go that low). Granted, mis-management and wrong product focus were also associated with Nortel’s fall.
To your 2md paragraph: You need to provide evidence, buddy. You can’t just make up stories as you go.
To your 3rd paragraph: Strangely, I kinda agree with you, although I doubt how much our government can control the number of carriers.
The sinner
To be the top dog you have to. Beat everybody else. British imperialism, American capitalism. They got to the top by playing by whose rules ? They made it as they went along. Dont the teach this at Havard ??
China and all the third world countries are just copying and following the paths of capitalism. Created and embodied by America for the last 60 years. who took advantage of others and eat four big macs a day. Plasma tv in the bedroom, living room. Toilet. Bathroom and now they feel that others are taking away one of their. It Mac and one plasma tv so they feel insecure and blame everything on the rest.
Then ? us ? We ? You ? Any difference ? No … Oh yes black white yellow red and possibly green. And SELF INTEREST …. Dont let it clouds your mind American hv the higher moral , ethical, blibical ground.
Helmut
Over the last decade Nortel was hacked, raped and pillaged into bankruptcy, by Chinese state sponsored hackers; much of Nortel’s technology now resides with Huawei. How did this happen?
John Chan
Nortel was hacked, raped, and pillaged into bankruptcy by its corporate thefts, Frank Dunn, Douglas Beatty and Michael Gollogly, they faked numbers, cooked books and stole money from share holders, pensioners and their employees. That was the behaviour priaised and treasured in the greedy capitalist world.
Now all Nortel pensioners have lost their incomes from Nortel pension they depend on for their dying days, they have to sell their homes, and probably to stay in shelters instead for their remaining lives.
Mike Zafiroski, an American, sold all Nortel employees’ hard work, patents, off to pocket handsomely for himeself instead of turning the Nortel around he hired to do, he wiped one of the few gems in Canadia industry from the face of the earth for good, and Canadian government stood by do nothing in name of free market economy. It is a Avro Canada replay.
This is the real story of Nortel, using Tiananmem Square Masscare technique to smear China is shameful and unscruplous.
Michael
I’ve always though HUAWEI was a good company. THis is an interesting read indeed. I do know my E587 mobile access point works like a charm… perhaps it’s a good idea to invest with them? Any security concerns should be probed and researched.
50 cents bridgade
Does that meant that GOOGLE suspected to be CIA funded corporation should be barred from the world? Let face it, the Chinese is too soft on US and Australian absurbed claims. Another thing about this author, he should do some research before claiming that Huawei lacks transparency. Nowadays, a lot pro US media is making a lot absurity about the Chinese. Thank God there are a lot of non Chinese is stepping up the plat to correct these distortion of truth. The sad part of it is that a lot of people China do not read these English sites and are no able to correct these untruth. For those who champion the truth and protect against this type of china bashing article, keep up the good work.
JohnX
Thats ok.
We just need to read these articles;
http://www.globaltimes.cn/NEWS/tabid/99/articleType/TagView/Default.aspx?Tag=South+Sea
It just shows everyone how China thinks of others. Personally, I feel after reading these opinion pieces and the comments that Chinese are seriously thier own worst enemy in terms of selling soft power.
If these are supposed to educate non Chinese to the Chinas position then its a massive fail.
“Many Chinese netizens are calling for action. It is probably time for China to take some substantial moves, such as economic sanctions, to counter aggression from the Philippines since protests and condemnation have not worked”
http://www.globaltimes.cn/NEWS/tabid/99/ID/697913/Manila-returns-to-usual-games-of-cat-and-mouse.aspx
So the fact that the Philippines wishes to carry out economic development in its own regional waters justifys Chinese use of economic sanctions against it?
So who’s the bad guy?
John Chan
Are you suggesting anyone, like Philippines or Vietnam, can go to Australia and starts to shipping iron ore out without asking Australian is a legitimate action? And if the Australians protest such theft and take action sanction such theft, then everybody should label and smear Australia a bad guy and bully like what you have been doing?
Further more do you mean hegemony like the USA can barge in with big guns and tell Australians that it is there to side with the weak, Philippines and Vietnam, to arbitrate the iron mine ownership disputes between Australia and the thieves? As well as Philippines and Vietnam can justify their theft as to carry out their economic developments?
Before Australia can accept the above argument, please refrain from making such ridiculous argument, because such precedent can apply to Australia too.
Michael
China can make as many socks and T-Shirts as they want however as soon as they try to move up the ladder of technology and dare challenge the West, they are now officially a threat! If China wants to be accepted by the West and thus good given good media press no matter how brutal they are (eg. India)they should just give up their dreams of being a developed country and go back to making socks and T-Shirts. Only then will the West accept them!
John Chan
It is called “only the West can invent and the only the West can succeed” attitude.
vec
Get rid of the last colonial outpost in Asia.