The Chinese company Huawei has enjoyed phenomenal success and recently edged out Apple as the second-largest producer of smartphones in the world (behind Samsung). The company,valued at $8.4 billion and generating almost $86 billion in annual sales, operates in 170 countries and enjoys numerous government partnerships.
It’s also faced scrutiny. The CEO, Ran Zhengfei, founded the company after working as a senior technologist for the People’s Liberation Army. Western intelligence services have continually issued warnings about security issues posed by the company’s ties to Chinese government and warned government officials from using its products. In 2012, Congress went so far as to issue a report labeling the company a national security threat.
More recently, Chief Financial Officer Meng Wangzhou, who is also the founder’s daughter, was arrested in Canada on U.S. charges of violating international sanctions on Iran. On Friday, Polish authorizes arrested the company’s chief sales executive in that country as well as a Polish citizen and former intelligence officer on charges of spying for Beijing.
If the allegations against Huawei in Poland play out, and European authorities successfully show that the company was involved in espionage, that should raise serious questions about current business partnerships with other Chinese firms. In this respect, the details of the allegations are deeply troubling. The arrested sales executive had been trying to sell Huawei technology to the Polish government. He also seems to have been somewhat successful at building relations with the government as Huawei was named the government’s official partner in rolling out its 5G strategy.
That would also mean that Huawei, a private company, was being used by the Chinese government as part of a seemingly coordinated espionage effort. Currently, China’s unfair business practices (specifically theft and forced transfer of cooperate technology) are the focus of concerns. Chinese exports and corporate expansion with the explicit goal of espionage and building Chinese government-controlled networks into the infrastructure of countries are much more troubling.
Beyond Poland, Canada, and the U.S., China increasingly partners with developing nations that may not have the resources, leverage, or allies to challenge Beijing in this manner. And Chinese infrastructure — such as the 5G network in Poland — will be difficult for most countries to unwind or dismantle. Additionally, the U.S. needs to work with its allies to help them better understand and counter Chinese influence.
The good news is that the U.S. is already doing some of these things, including working with allies that already use Huawei technology and considering aid for countries developing telecommunications networks. The bad news is that those efforts are not nearly enough. Huawei products are popular, and its technology is already heavily integrated in other countries, including allies like Germany and Japan.