Huawei Technologies is one of the world’s largest makers of high-speed wireless telecom equipment. The Chinese company is also at the centre of an American political storm.Earlier this month, the House Intelligence Committee issued a report warning U.S. companies to avoid doing business with Huawei and another top Chinese tech firm, ZTE.
Today a White House report said that there’s no evidence that Huawei has actually spied on any of its customers, but warned that its gear is vulnerable to hackers.
U.S. officials are concerned that Huawei is a Trojan horse for the Chinese government. They think that the Chinese government can order Huawei to let it spy on its U.S. customers or even to shut down the telecom system if it decides to conduct “cyber war.”
Huawei officials claim that its just another international company trying to earn more U.S. business. But the company is secretive, with ties to the Chinese military and a mysterious founder.
Huawei also has a long, nasty history with Cisco, an American competitor. In 2003, the company was found to have copied Cisco’s technology. Motorola also had similar complaints with Huawei. Cisco CEO John Chambers said last April that Huawei is the company he fears most.
“60 Minutes” was given a rare inside peek at Huawei offices in China and the U.S.
At the centre of the controversy is Huawei CEO Ren Zhengfei. He rarely speaks publicly.
He was a major in the Chinese army specializing in telecom research. When he retired, he founded Huawei with a few thousand dollars savings and no help from Chinese government, the official story goes. But U.S. officials don't believe that. They say Huawei's 25-year rise to the top was heavily funded by the government.
Huawei's headquarters is a beautiful, modern campus in Shenzhen.
Huawei, a private company, says it is 'employee-owned.'
One of the things that has U.S. officials so nervous is how secretive the company is about its management structure. Even when a Huawei executive was questioned by Congress as part of this ongoing probe, he wouldn't reveal much about that.
'60 Minutes' was given a tour of the Chinese headquarters but was not allowed to talk to anyone there.
The U.S. does tons of business with China. But telecom is considered critical infrastructure. There are a lot of telecom providers, but anything that gives bad actors the ability to attack or manipulate communications is a concern.
Huawei's 4G, or fourth-generation, wireless equipment is known to be good and less expensive than competitors. This is has helped it grow to become the biggest telecom provider in the world, with $32.4 billion in revenue--70% from outside of China, it says.
It is one of three companies worldwide to make all the pieces for a full 4G network. None of those are U.S. companies.
In addition to Huawei, 4G gear is made by Ericsson, a European company, and Alcatel-Lucent, a Franco-American company that owns Bell Labs. Cisco also makes some 4G gear, but not the whole product line needed.
Chinese employees assemble gear at the facilities, but did they design it?
U.S. companies like Cisco and Motorola have long accused Huawei of illegally copying them. Huawei was found to have copied Cisco gear, practically bolt-for-bolt, back in 2003. It settled a lawsuit and changed its design.
Huawei claims that the fears about it are not only unfounded but bad business. The company claims it buys $6 billion of American-made components every year and is simply another international company trying to do business in the U.S.
Huawei also makes other network equipment that competes head-to-head with Cisco in enterprise data centres. This gear is less expensive, but also less fancy. However, new forms of software-based networking are being developed that could make a lot of U.S. companies prefer low-cost Chinese network switches over Cisco's pricier ones.
Cisco has a lot to gain if U.S. companies are scared off from buying from Huawei.
After an 18-month review on Huawei, a White House report said there was no evidence of spying but it still warned U.S. companies the gear was was risky for other reasons, like security holes that hackers could exploit.
U.S. officials say that Chinese companies are not the same as other international companies because the Chinese government, particularly the Communist Party, is the ultimate ruler.
The Communist Party even has an office on site at Huawei, '60 Minutes' reported. That's not unusual in China, where the party is interwoven into daily life.
Congressman Mike Rogers (Republican), a ranking member of the House Committee on Homeland Security, says U.S. companies should not buy from Huawei.
'If you are looking at Huawei, I would find another vendor--if you care about your intellectual property, if you care about your consumer's privacy and you care about the national security of the United States of America,' he told 60 Minutes.
Congressman Dutch Ruppersberger, a Democrat and the ranking member of the House Intelligence Committee, also thinks Huawei is a threat.
'In the telecommunications world, once you get the camel's nose in the tent, you can go anywhere,' he warned. He's concerned that the Chinese government could use Huawei to intercept messages and conduct cyber war.
Huawei employs several hundred people in the U.S. already, most in its Plano, Texas campus, but also in the Bay Area.
U.S. officials have managed to stop some big telecom deals involving Huawei including a $5 billion deal from Sprint for 4G gear.
But Huawei has still won a few U.S. customers, particularly in rural areas like parts of Kansas.
Executives at the Kansas telecom said that its new Huawei network offers the fastest Internet speeds in the country and they don't buy into the government's fears.
Huawei is determined to win business in the U.S. and has begun to run its own PR campaign here, including plenty of TV commercials.