MINGYI LI WRITES–The CFO of Huawei, Mengwan Zhou, was arrested by Canadian officials on December 1st, 2018, for allegedly covering up violations of sanctions for Iran. Now she is facing extradition to the US. Her arrest has drawn sharp criticism, mainly from skeptics of US motivations. Are these fair criticisms?
Consider the background of events. Huawei is the world’s largest telecommunication manufacturer and second largest producer of cell phones. In 2019, Huawei became a serious contender for Apple. Both launched their new phones at the same time, with Apple losing ground to Huawei because the Apple iPhone is too expensive and lacks other breakthrough technologies.
Since last year, the United States has warned of security risks in using Huawei products, even asserting that the Chinese government could use Huawei’s technology to spy on Americans and attack U.S intellectual property so that they could steal technology from American tech companies. Coincidental timing?
In addition, the Trump administration recently launched a campaign asking US allies to prohibit Huawei from gaining footing in the market or engaging in any form of business with them. As a result, the U.K and Australia, among other countries, would not buy 5G equipment from Chinese tech companies in 2018.
But this didn’t work out so well on a global scale. Australians complained about the slow internet connection. Under their current local internet provider, Telstra, internet speeds are only 8.5 Mbps– ranking 51st in the world. Some European countries face similar problems.
Meanwhile, the Chinese government worked to expand Huawei’s market through promotional efforts of the Chinese Ministry of Foreign Affairs. Recently, then, Germany announced that it may use Huawei hardware for 5G networks since Germany’s cybersecurity agency investigation showed no evidence of Huawei data theft.
Meanwhile, Zhengfei, founder and president of Huawei, denies FBI director Christopher Wray’s claims that Huawei is a threat to US security (despite some evidence that Huawei gave bonuses to employees who stole information from other countries). Zhengfei further notes that his company is being singled out, when many other companies, such as Ericsson and Cisco, have faced similar concerns. He asks: If Huawei is denied entry into the US market, how can the US claim Huawei-related cybersafety concerns?
So now we have not just a US-China trade war, but a tech war. If CFO Zhou is convicted, the tech industry, and not just Zhou’s personal fate, may be forever changed.