Huawei: We want to be open and transparent

Chinese networking giant Huawei is trying to make itself more transparent in an effort to convince the world that it’s not spying on global communications for the Chinese government.

The 25-year-old-company, founded in 1987 by ex-military officer Ren Zhengfei, kept the majority of its business operations behind closed doors for much of its existence but today it is aiming to be more transparent. As part of that effort, Huawei invited Techworld to look around its two square kilometre campus this week and meet with several of the company’s senior executives.

“We want to be open and transparent and have people to understand who we are,” said Huawei’s head of international media affairs, Scott Sykes, in Hong Kong on Wednesday. “This is a huge change from three or four years ago.”

Prior to that time, Sykes said Huawei focused on understanding the business challenges faced by its customers, doing research and development and creating products. “[We thought] everything else would take care of itself but maybe that was a bit naive,” he admitted.

The Shenzhen-headquartered firm, which posted revenues of $35.4 billion (£21.8 billion) last year, sells its telecoms equipment to network carriers but the fact it is now serving consumer and enterprise customers means that it is becoming an increasingly public-facing company.

“It’s important for people to know who we are and what our intentions are because of the two new businesses and because the relative strategic importance of telecoms has risen dramatically in the last decade,” said Sykes, explaining that the bar for Huawei is higher due to the fact that the company’s headquarters are in China.

As part of the “opening up” process, Huawei started publishing its annual financial results in 2000 and this year the KPMG-audited results were more detailed than ever at over 100 pages.

“We disclose information today in most of the ways that a public company would even though we’re under no obligation to disclose anything because we’re a private company,” said Sykes.

Relationship with the US

Huawei has arguably faced the most opposition from the United States, which is deeply concerned that the Chinese firm is building backdoors into its equipment that could be used by the Chinese government to spy on US communications.

“If we’re going to put it [the US relationship] down to one reason it’s protectionism,” said Sykes. “It’s more complicated than this and you could add politics and Sinophobia perhaps, but the main reason is trade protectionism. We’re ready, willing and available to serve telcos and consumers in the United States but the fact is, we see no significant commercial opportunity for the foreseeable future.”

However, Huawei does believe that attitudes in the US will change eventually, according to Sykes, who was unable to say when or how. “We are hopeful that one day pragmatism will win over protectionism,” he said. “Nothing simple is going to solve that US challenge. Acquisitions, going public, all other simple approaches that you might think of won’t solve what’s happening there.”

In contrast to the US, the UK is working more and more closely with Huawei. Last week UK chancellor George Osborne visited the company’s headquarters to announce a new $200 million (£123 million) UK R&D centre, after stating that Britain is open to Chinese investment.

Much of BT’s telecoms infrastructure is already underpinned by Huawei’s equipment and other countries in EMEA are following suit. Huawei announced yesterday that it has secured a $700 million (£432 million) contract to replace Danish mobile operator TDC’s equipment (previously supplied by rival Ericsson) with its own gear.

Whether Huawei’s transparency efforts will change attitudes in certain countries remains to be seen but the company’s target of reaching $60 billion (£37 billion) revenues by 2017 might just depend on it.