Huawei’s Troubles in the US Have Become a Political Case

“We are not interested in the US market anymore,” followed a day later by claims that the statement was interpreted incorrectly and that they have no intention of leaving the US market. The two statements from Huawei, the world’s largest provider of telecommunications products and services, shook analysts and made waves in political circles. The Shenzhen-based giant has been trying to penetrate the US market for years, but the door has been repeatedly shut in their face for political reasons, without considering the economic value of the company, or its technical capabilities.
The stakes for Huawei are first business related: entering the US market would give it access to more users worldwide, with big, long-lasting contracts. It has already signed agreements with 45 out of 50 of the largest communications companies in the world (recently joined by Italy’s Wind), but in the US is has been a mostly secondary player, with a modest research and distribution presence. Last month, for example, Sprint Nextel – the third largest mobile operator in the US – was forced to make a formal statement reassuring the US House Intelligence Committee that it would not use hardware made by Huawei. The self-imposed restriction is the result of a government investigation from October 2012 that accused Huawei of insufficient corporate transparency and suggested that the company be banned from operating in the United States, without providing any concrete proof. The reasons for the opposition are twofold: the most important regards Huawei’s relationship with China’s military. The company’s founder was a high-ranking officer in the People’s Army, and the risk of Huawei’s advanced electronic equipment being used for espionage is high. Recent cases of cyber crime – suspected to be emanating from Beijing’s military – have certainly not helped defuse the tension. The whole of Huawei’s corporate framework is also very opaque. It is officially collectively owned but managed privately, but the role played by the government, which one would expect to be central, has never been publicly acknowledged.
The company’s drawn-out fight in the United States has so far been a losing battle. It has been forced out of contract bids, prevented from acquiring American companies, and has been denied the opportunity to purchase patents. Each obstacle has been erected in the name of American national security. Meanwhile, Huawei has been reaping success and profit in every other part of the world, especially in Europe. It currently employs nearly 150,000 people and is continuously expanding towards the more profitable realm of service provision, and the only place it has stumbled significantly is in the US. The seemingly contradictory statements likely reflect two concurrent orientations within the company: techno-nationalism (opposed to Washington’s similar stance) and the hesitation to abandon the world’s largest market for telecommunications. The solution to the problem will have to be found by cooperation between the two governments, and if there is ever a clearing of the political skies, US companies will soon be counted among the clients of the Chinese multinational.