Huawei: The Chinese Company That Scares Washington

Is Huawei an agent of the Chinese state, as critics charge, or simply a successful foreign business that might challenge the titans of American tech?

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Dominic Nahr / Magnum for TIME

One of the main Huawei buildings on its compound in Shenzhen, China

There is not much that brings together Democrats and Republicans these days. But on Huawei, the Chinese telecommunications giant, American politicos are uncharacteristically united. Though largely unknown to U.S. consumers, Huawei Technologies is an industry leader in the field of telecommunications infrastructure, the “plumbing” of mobile-phone networks. Last year its sales topped $35.4 billion — more than Goldman Sachs and McDonald’s. It likes to brag that one-third of the world’s population is hooked up to networks that use its gear. But that’s precisely what makes the U.S. nervous.

In this week’s magazine (available to subscribers here), business correspondent Michael Schuman explores the U.S.’s distrust of the private Chinese firm, which reflects Washington’s wider distrust of Beijing. Is Huawei an agent of the Chinese state, as critics charge, or simply a successful foreign business that might challenge the titans of American tech?

U.S. lawmakers see the private Chinese firm as something of a Trojan horse. Writes Schuman:

Experts worry that allowing Huawei equipment to plug into the networks would give the Chinese government or the People’s Liberation Army (PLA) backdoor access to sensitive computer systems or telephone lines, potentially allowing them to disrupt communications or pilfer valuable economic and military secrets. The danger, the company’s detractors say, isn’t just theoretical. “We believe that China has the means, opportunity and motive to use their tele­communi­ca­tions company against the U.S.,” says Congressman Dutch Ruppersberger, the ranking Democrat on the House Permanent Select Committee on Intelligence. He says the committee wants “to put our citizens on notice” about “how serious this is and that the Chinese government is working with them and is involved.” Fears over Huawei also reflect the growing concern about the vulnerability of American communications networks, which have recently come under repeated attacks by Chinese hackers.

(MORE: Hack Attack: China and the U.S. Trade Barbs on Cyberwarfare)

Indeed, the attention garnered by recent cyberattacks has done little for the firm’s prospects in the U.S.

In recent weeks President Barack Obama and Treasury Secretary Jack Lew have both warned China to stop its online aggression, and Defense Secretary Chuck Hagel in March called for U.S. intelligence assets to be repositioned from the Middle East to Asia to protect against the growing threat. In February a U.S. security firm accused the PLA of running a massive hacking ring. (There’s also alarm about old-fashioned spying. In the past year alone, the Justice Department has charged more than 100 individuals or corporate defendants with stealing trade secrets or dual-use technology for China or Chinese entities.) With the links between Huawei and the Chinese state and military still murky, its critics are convinced that the company is a Trojan horse. As a major global telecom player, Huawei is certainly too big to ignore. Is it also too big to trust?

Huawei insists it would never spy on the U.S. or anyone else. Countries like South Korea and the U.K. use Huawei gear without incident. Some see the American response as tech protectionism.

“It would be immensely foolish for Huawei to risk involvement in national security or economic espionage,” Charles Ding, a senior vice president at the company, told the House committee during hearings last year. Other Huawei officials suggest that security jitters are a cover for old-­fashioned protectionism. “Security is not the real issue,” says Rajiv Weimin Yao, a Huawei vice president based in Gurgaon, near New Delhi. Huawei says its competitors benefit from steps to block its progress. “You can’t help looking at the U.S. [security concerns] with jaded eyes,” says Eric Harwit, a professor of Asian studies at the University of Hawaii and the author of China’s Telecommunications Revolution. U.S. politicians, he says, “are just protecting their own companies.”

For now, at least, U.S. lawmakers seem unlikely to budge, a fact that may force Huawei to focus on the market for smartphones rather than telecommunications infrastructure. “No one cares about handsets,” James Lewis, director of the technology and public-policy program at the Center for Strategic and International Studies tells TIME. “They can sell as many as the market can take.” Or that’s the hope, anyway. With all this talk of spycraft, will America buy in?

MORE: Are Chinese Telecoms Firms Really Spying on Americans?

MORE: Why China Must Push Reset
40 comments
jooki
jooki

Hilarious to read some of the comments here before everyone found out that their own government has been spying on them for years. Not to mention that Canada and the US are in hot waters for industrial espionage in Brazil. 

All this propaganda does nothing for these countries except call them out for what they really are; a couple of dishonest, back-stabbing "allies".

goingtorise
goingtorise

the chinese government should also prohibit Apple products into china market.

kidofstreet
kidofstreet

Here's in one key difference: the US government can do what it wants, but its citizens has a wide range of options to pursue legal recourse against the actions of the government if they are contrary to the laws of the land. In the People's Republic, this is NOT a valid course of action. 

In other words, when the US government is caught in an illegal act (let's just use illegal surveillance for example) people can be arrested, tried, and jailed. If the Chinese Communist government does this, the people who complain go to jail. There's no transparency, you can't even compare the US and the PRC in the same sentence when it comes to this. Sorry, but it's just simply harder to fool people in the West into thinking that mainland China has an honest, reputable government.

I would never, ever, trust any telecommunications product produced in the People's Republic. I personally make sure that all of my computing equipment comes from Thailand (Hard Drives), RAM (South Korea or Japan), Taiwan (Motherboards), and Costa Rica (Processors) to completely bypass the mainland Chinese supply chain. 

European and Asian nations who use Huawei are pretty much giving the PRC/PLA the keys to the kingdom. They're the biggest chumps in the world.

I find Huawei's assertions laughable: let's say a company goes through the effort to scrub the hardware to make sure there's no surreptitious monitoring enabled. THERE'S NOTHING PREVENTING HUAWEI FROM PUTTING OUT A PATCH OR SOMETHING TO INSTALL THIS FEATURE LATER. 

You PRC/Huawei shills crack me up. Keep at it please, the more desperate you try the more you show why Huawei will never, EVER penetrate the US market. 

But honestly do you need to? China already owns the deed to the US, what more do you want, the clothes off our backs?

lelandwi11iams
lelandwi11iams

Only a fool would allow this company to sell IP equipment in the US.  Of greater concern are the CHINESE mob phones and laptops, now sending data to Chinese surveillance arms of their govt.  China=unethical communism. dudes.

BajieZhu
BajieZhu

These false accusation of spying is nothing but dirty pool.  Western telecoms can't compete, so they bring in the pols and make false accusations.  Huawei is the world leader in telecom.  It holds hundreds of patents on 4G LTE.  Huawei has the most extensive experience in 4G, having uilt 73 LTE networks in 42 countries, accounting for about 70% of the entire world's 4G deployment.  Huawei is in a class by itself, and its technology leaves the next rung of competitors-wannabes in the dust, at 30% lower prices. 

Can't compete fairly, play dirty pool.  

This week NZ Telecom awarded its entire 4G mobile network infrastructure to Huawei to build. 

xLany
xLany

What happened to innocent until guilty? Perhaps Time Magazine should wait for this little thing called "evidence" before thoughtlessly accusing any company of misconduct. Oh, and the evidence should actually be concrete, which the "proof" published in this week's article is decidedly not. 

For example, the article state that "Much of the suspicion Huawei attracts can be traced to its founder... who rarely appears in public." To further describe how an introverted company founder leads to the conclusion that his company is evil and want to take over the world, the article goes on to describe how he "has no hobbies" (gasp! the CEO of a company that had more sales than McDonald's doesn't have the time for a hobby?). 

Also hilarious is the last sentence: "The most dangerous Trojan horses may be the ones that don't.... employ p.r. consultants."

Ah, hysterical.

Also, I'm disappointed by how biased the article seemed, while reporting is supposed to be objective and based only on evidence. Although there is an endless parade of unnamed analysts who claim that China will attack the USA through telecommunications, the only source on the other side are Huawei representatives who Time disdainfully referred to as "an army of smooth-talking spokespeople" with about 1 or 2 other outside analyst.

Third, it's amusing how Americans are so paranoid now. We have the best army in the world and our nation is filled is filled with brilliant technicians and code writers and more. We'll be absolutely fine without these witch hunts too.

RenoNoone
RenoNoone

trojan horse ... backdoor access ....

We're talking about Microsoft Windows, right?

GooGulsux
GooGulsux

This may be the biggest idiot test in history. 

Huawei is a state controlled interest of an enemy country that routinely hacks American companies and government agencies. 

So, why would any American company, government agency or individual believe a product purchased from this company is secure?

This is basic buyer beware. 

MichaelJohnson
MichaelJohnson

let me see if i got this straight; this is a time article about a time article?

BajieZhu
BajieZhu

WHY is the American government so sure that Huawei is doing these dastardly acts?  

The only reasonable conclusion is that it is what all of the American tech companies are doing to others.  What is good must be universal, and America's exclusion of Chinese will just draw comparable reaction. 

How much do companies like Huawai and ZTE sell in America?  How much do American techs sell in and to China?  The profits alone on the American side is much larger than the gross sales from the China side.  Who has more at stake is easy to see. 

MatthewW.Hall
MatthewW.Hall

We have no idea if South Korea or the U.K. have had "incidents." They'd never admit it if they had. Nor should they. It would only show their attackers how successful they were. What a naive article.

MarcusTaylor
MarcusTaylor

Let me 'translate' the U.S. Governments position. Huawei Technologies may try and do what we've been doing for years, and that just will not do.

drudown
drudown

It isn't a function of it being Chinese, but rather, the United States cannot cede control of Telecommunications logistics that touch and concern National Security. 

mhexcalibur
mhexcalibur

I have first hand experience with Huawei stealing and lying. In 1997 I was working as engineering director for ECI on assignment to share our remote access server techology in a business deal where Huawei promised to integrate our product and sell in under a joint sales arrangement in China. After three weeks of carefully explaining our product to the 25 engineers of Huawei, 24 of which we we told did not speak English so myself and collegue were instructed to present very carefully and slowly, all 25 of them stood up and started speaking English flutenly and theHuawei leader said blatantly "thank-you, we don't need you guys anymore." and that was the end of the deal. They simply stole the entire design in a blatant setup in which all of these people were in on the steal. DO NOT TRUST THIS COMPANY. EVER!

SmarterThan-You
SmarterThan-You

In the world of espionage, you must assume that Huawei is working with the Chinese Government. Therefore, the US must take measures that protect privacy of their people - bottom line.

JohnSampson
JohnSampson

More paranoia! Goodness the great and mighty USA will be shuddering at the images in the mirror soon. How scared can one country get?

It's no wonder every American has to have a gun!

jefforsythe9
jefforsythe9

It is far too late for the  Chinese Communist Party to own up to or redeem itself for its past sins because those sins are too great and too heinous. Crimes such as the murder of one hundred million of its own people, crimes such as the attempted genocide of tens of millions of innocent Falun Gong practitioners by the use of torture, slavery, organ harvesting and murder. Once the cruel Party dissolves, and it soon will, the common gangsters, who call themselves leaders, will have to pay in court for their crimes. This is just my understanding, thank you for your consideration.

rorywong654
rorywong654

Save the world by not buying or have anything to do with US

LuwianMemories
LuwianMemories

@kidofstreet 

It's the US government taking away its citizens rights - worry more about your own leaders than some geriatric pseudo-communists across the Pacific.

lelandwi11iams
lelandwi11iams

@BajieZhu Talk to anyone who lives in China and they will tell you ALL ABOUT govt surveillance of private citizens.  You obviously work for the chinese govt.

BajieZhu
BajieZhu

@GooGulsux

 That is a possible, but not plausible scenario - other than thief-screaming-stop-thief type wild arse speculations, there has not been even one single instance of proven allegation against Huawei in doing untoward things on behalf of the China government.  On the other hand, history is filled with American companies gleefully reporting spying for the American government.  The history books are replete with examples such as copier companies building in that extra camera on the copier sold to the Russians.   Various American companies are expected to fully comply with the American spy and military requests to allow full access to even customer private data - in programs such as MAGIC LANTERN. 


It is easy to understand why America is so paranoid even in situations (such as with Huawei) in which there is no evidence that the Chinese companies acting in any untoward manner.


ECHELON, CARNIVORE, MAGIC LANTERN, INFRAGARD, PROMIS, Stuxnet, the Flame worm…. The list just goes on. Data collection without permission (if anyone else does it you’d call it stealing), hacking, physically and maliciously destroying the equipment and networks of others, done on a scale 100 times larger than that of the rest of the world put together, and for much longer periods of time. Spy satellites, coastal SIGINT, There is no major fiber optic undersea cable going into or out of any country that has NOT been hacked by Americans, with the help of its gang of international thugs such as the UK. Nobody else has the capability to do mischief on this scale, or ever attempted to do as much.

From the end of WW II to now, data taken without permission from China by America and the West is at least a 100,000 times compared to that going in the other direction. And it is well documented that America uses the stolen information to favor its own commercial interests.

http://content.yudu.com/Library/A1r7zs/TheNSAandShadowGover/resources/83.htm

What is good must be universal. America should show the world leadership and stop, and the world would follow.


But in the mean time, the world should follow America's example and impose the same "safeguards" against all American tech companies?

pggcoding
pggcoding

@MarcusTaylor  Only thing you could point to is Stuxnet, which was for a worthwhile cause, so beyond that you don't know anything.

BajieZhu
BajieZhu

@mhexcalibur

Did you sue your lawyer for malpractice yet for not having you sign the appropriate documents?  

The U.S. Supreme Court had long espoused the view that UNLESS there are actionable rights being infringed, free competition encourages copying and derivation, as competition drives down costs and benefits all consumers. IP protection keeps prices high (iPhones would be worth only $50 but for the IP protected monopoly), and benefits only the IP owners. Last I checked, the 314,000,000 consumers in the U.S. still outnumber IP owners by hundreds of millions.  

Trade secrets (if there be any protectable) are for you yourself to protect.  If you did not take the appropriate steps to protect it, it is your own damn fault.  


gretty
gretty

@BajieZhu@GooGulsuxFalse equivalency. Huawei is a national leader in software and hardware development and has proven ties to the CCP aswell as many allegations and concerns about espionage. To turn the spotlight onto the US would only be valid if one of its national leaders (apple, microsoft, google, etc.) had the same proven ties to the US government or government agency and had a series of allegations and concerns about espionage. There is no US company meeting that criteria.


Your argument is trying to invalidate the argument by claiming hyprocracy (that being US government cyber operations) aswell as bringing up western 'mistreatment' of China in the past (which is irrelevant to the story and your argument and says more about your inferiority complex than it makes a credible argument). You can only claim hypicracy when a major US software company acts the same way as Huawei and that situation doesn't exist so the 'criticism' is valid.

BTW how do you get paid per post ;)

kidofstreet
kidofstreet

@BajieZhu @mhexcalibur Give me an effing break what US company has EVER been successful in suing a Chinese company for infringing on IP? GTFO of here you shill, you crack me up. 

BajieZhu
BajieZhu

@Gretty:

There is a big gulf between what Huawei does and what it is being accused of doing.  In the former, in the two decades that Huawei's world leading technology is used worldwide (at a cost of 30% lower than Western offerings), there has not even been one single instance of proven spying or data theft from customers or governments that had been proven against Huawei.  The accusations are pulled out of the dirty minds (or other comparable orifices) of xenophobic Western pols keen on protectionism.

What is good must be universal, if China applies the same rules against American tech companies, they'd be blocked from the fastest growing major market for the next 50 years.  Today, 60,000 U.S. projects make profits totaling more than $100 Billion each year in and from China, translating to over $2 Trillion in stock market wealth (at P/E of 20).  If the xenophobic protectionism continues, expect to see that evaporate.




BajieZhu
BajieZhu

@gretty@BajieZhu@GooGulsux

 EXACTLY.  Google is PROVEN to be working worldwide to threaten the securities of sovereign countries  at the behest of the American government - while the accusations against Huawei lack proof.

Google is exposed of "getting White House and State Department support & air cover" and "poses a threat to global security when privacy information in exchanges without control of any government. This directly violates the international agreements on classified and non-classified information exchange of the UN."

http://www.presstv.ir/detail/2013/04/06/296865/google-beyond-the-cia-and-espionage-factory/

 We are NOT talking about any ephemeral "past" - Western, especially American, cyber attacks and data theft from China had never stopped since WW II ended. 

 What is good must be universal.  


kjwrite
kjwrite

@rorywong654 @pggcoding Ha ha. This is great. It's like old school propaganda only on the Internet "Oh you imperialist boot licking dogs. You will not triumph on communism happy marching on world" (INSERT EVIL LAUGH) wtf??