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Huawei CEO goes public on CFO arrest & China security concerns

19 Dec 2018

Huawei held a press conference at its new campus in Dongguan on Tuesday 18 December.

Journalists were treated to a visit of the company’s R&D labs exhibiting materials and thermal management technologies developed for 5G equipment, in addition to an independent cybersecurity lab.

Huawei rotating chairman Ken Hu then sat down for a press conference, where he was promptly grilled by the media regarding his thoughts on recent events like nations turning their back on the company’s 5G solutions due to perceived security risks from China, and of course, the arrest of CFO Meng Wanzhou in Canada at the request of the United States.

Hu wasted no time in asserting his confidence in the company’s growth and prospects, and expects revenue in 2018 to exceed US$100 billion. Before questioning, Hu also brought up the elephant in the room that was the allegations and stated that it’s ‘best to let the facts speak for themselves, stressing that the company has maintained a clean security record from day one, with no serious cybersecurity incidents in 30 years.

Here are some of the highlights from Hu’s initial presentation:

5G

The company has locked in 25 commercial contracts which according to Hu, puts it in first place among all ICT equipment providers having already shipped more than 10,000 base stations to markets around the globe.

While Hu acknowledges some security concerns surrounding 5G to legitimate, but the bulk of these can be resolved through collaboration with operators and governments.

Hu says there have been cases where countries have used 5G issues as ‘an excuse groundless speculation based on ideological or geopolitical considerations’.

According to Hu, these moves to block market competition will only slow adoption of new technology, increase costs for network deployment, and raise prices for consumers, quoting that if Huawei were allowed to compete in the US for 5G deployment from 2017 to 2020 it would save the country around $20 billion of capital expenditure in wireless infrastructure.

Cybersecurity

Hu says cybersecurity is the number one priority for Huawei and trumps everything else.

The company has subjected itself to the most rigorous of reviews and screening by regulators and customers, as Hu says it understands the legitimate concerns that some stakeholders may have.

Hu says there is no evidence that implicates Huawei’s equipment to be a security threat. Despite the often-quoted concerns about Chinese law, Hu stressed the Chinese Ministry of Foreign Affairs had formally explained that no law requires companies to install mandatory backdoors.

However, he says the company remains open to concerns about its openness, transparency, and independence. Any proof or evidence could be shared with telecom operators, if not to Huawei or the public at large.

Hu also said despite some media reports, there is no official decision from either France or Japan saying they would ban Huawei from 5G.

Compliance

The other elephant in the room regarding Huawei’s CFO was also touched upon. Hu said he was unable to comment due to legal reasons, however he assured that business operations were not being impacted by the event.

There has been no effect on executive travel plans and Huawei remains confident about its travel compliance system, and assured in the fairness and independence of the judicial systems in Canada and the US.

To wrap up the press conference, Hu had a few closing quotes.

"This is journey of transformation that has helped us grow up from an unknown vendor to the 5G leader. I'd like to share a saying from Romain Rolland – ‘There is only one heroism in the world: to see the world as it is, and to love it',” Hu says.

“At Huawei, we see what we have encountered, and we still love the work we are doing. Similarly, in Chinese, we have a saying: 道阻且长,行且将至. It means that the road ahead is long and hard, but we will keep moving and reach the destination, because we have already embarked on this journey.”

Hu then faced a number of questions from journalists (mainly centred around the arrest of Meng and the perceived security risks of being a Chinese company), with varying responses.

Hu was asked to clarify the company’s stance on growing concerns from international governments about China’s influence on Huawei and potential to access illicit information.

“Of course, just like the US and Australia, China also has certain legal requirements for counter terrorism or cyber security objectives. China also specially emphasizes that all government institutions or agencies must enforce the law according to the law. There are clear definitions,” says Hu.

“For Huawei, our approach is to address these issues in strict accordance to the law. In the past, we haven't received any requests to provide improper information. In the future, we will also follow in strict accordance to the law in dealing with similar situations. When we talk about according to the law, the law has clear stipulations around the terms of reference for related agencies.”

Following the arrest of Meng in Canada, the Chinese government then arrested two Canadians on national security concerns, and thus Hu was questioned whether this was in direct retaliation.

And Hu? “No comment on that.”

A scenario was then brought up how carriers around the world are supposedly considering or have already decided to rip out Huawei equipment or steer clear of it for 5G deployments, and whether in light of this Hu is confident in sustaining the company’s growth.

“We are not seeing as pessimistic a picture as was described just now. We didn't see operators saying they want to swap out Huawei equipment or they want to stay clear from Huawei. On the contrary, out of the hundreds of operators we work with in the world, almost all of them are saying they want to work with Huawei, using Huawei equipment for their 5G networks, because they know we are the best. Only by using the best equipment can they build up their 5G networks faster and can they build up their 5G networks in a more cost-competitive way,” says Hu.

“I think it's not necessary to always dwell on fear or speculations without any facts. Having said that, it definitely does not mean we don't value other voices or concerns around Huawei's openness, transparency, and independence. Therefore in the past and in the future we will continue to adopt a transparent approach in proactively communicating with all stakeholders on all of their legitimate concerns, by providing more information that they need.”

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