Telecoms

Fit and proper

Huawei gets green light from the Brits

A Huawei logo is seen above the company's pavilion during the CommunicAsia trade show in Singapore

London calling

One way in which China differs from, say, Britain, is the degree to which many of its people take an interest in the achievements of Chinese companies abroad.

Thus, last month, when telecoms giant Huawei was given a clean bill of health by a British board that assesses national security, it not only made the news, it lit up social media networks too.

Twice, in less than a month, Britain had lent its support to Chinese organisations that the US is suspicious of.

“The UK-US relationship is changing from ‘special bond’ to having disputes,” China’s official news agency Xinhua said.

As readers of WiC will know, the first UK move to incur American annoyance was the decision to join the Asian Infrastructure Investment Bank (AIIB) last month (see issue 275). The US is wary of the Beijing-led project because it believes it will undermine the work of the World Bank and Asian Development Bank, run under the influence of Washington and Tokyo respectively.

When Britain announced its intention to join the AIIB the White House took the unusual step of releasing a terse statement: “This is the UK’s sovereign decision. We hope and expect that the UK will use its voice to push for adoption of high standards.”

But the Financial Times also quoted an anonymous American official criticising the UK and its “constant accommodation of China”, adding this was not “the best way to engage a rising power.”

Likewise Washington harbours deep suspicions about Huawei. In 2012 an intelligence committee from the House of Representatives labelled the telecoms equipment maker “a security threat”, claiming that it had ties to the Chinese military. It recommended that the Committee on Foreign Investment block all acquisitions, mergers and takeovers involving the Chinese firm.

Since then, Huawei has essentially been shut out of America’s telecoms infrastructure market.

So the Shenzhen-based firm was probably concerned when similar noises started emerging from the UK last year, where Huawei works with local brands such as British Telecom and O2.

The concerns, which originated in the Parliamentary Intelligence and Security Committee, focused on the workings of a cyber-security evaluation centre set up in 2010 to allow British experts to evaluate Huawei products before they were used in UK infrastructure.

Specifically, it was the fact that employees of the centre were on Huawei’s payroll that made the committee uncomfortable. Instead, it recommended the centre be staffed by employees of Britain’s intelligence agency, GCHQ.

Since then there have been two reviews of the Banbury-based centre, first by national security adviser Sir Kim Darroch, and then by the centre’s new oversight board, which is led by the intelligence services.

“Any risks to UK national security from Huawei’s involvement in the UK’s critical networks have been sufficiently mitigated,” it concluded.

On the whole, Chinese media was delighted by the verdict. “The acceptance of Huawei by the UK is another example of China confidently and consciously confirming its peaceful rise,” an opinion piece celebrated in the Global Times. “It is a landmark event.”

Yet netizens were a little more sceptical of the UK’s motives, with some attributing Huawei’s clean bill of health to reciprocal promises of Chinese investment, as well as its backing of London as Europe’s leading hub for the offshore renminbi. “This is an exchange. China has agreed to the trading centre and the UK has announced Huawei’s innocence,” wrote one.

Huawei said the evaluation showed that “in a globalised, interconnected digital age, we must all work together to deliver the best solutions to the challenges we face. “

Late last month Huawei posted annual profit of Rmb27.9 billion ($4.5 billion), up 33% from 2013. Revenues were up 21% to $46.5 billion, of which 60% was earned outside China. Huawei has set a target of making $80 billion in revenue by 2018. The UK’s green light ought to help it win more international orders in the future.


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