From Real Clear Defense, July 3:
How did a small Shenzhen-based manufacturer of telephone switches defy tough domestic and international competition to become a world leader in telecoms technology? And how did it manage to start producing its own 5G processors despite international sanctions specifically designed to prevent this from happening?
Telecoms equipment makers are notoriously publicity-shy. They guard their trade secrets jealously and manage their public images carefully. But even by the sector’s exacting standards, Huawei, currently the world’s largest manufacturer of telecommunications equipment, is exceptionally secretive. Its founder, Ren Zhengfei, studiously avoids the limelight, and media visits to the company’s huge campus in Dongguan in southern China are carefully curated and give away little.
In House of Huawei, Eva Dou lifts the veil of secrecy surrounding the tight-lipped company. Dou is a technology reporter for The Washington Post and spent seven years in China and Taiwan covering politics and technology for The Wall Street Journal. Tapping into her wide network of contacts in the sector, she has put together a thoroughly researched, credible and balanced account.
Dou anchors her narrative in China’s recent economic history. Ren established Huawei in 1987 in the Shenzhen special economic zone to manufacture telephone switches for China’s burgeoning economy. Before establishing the company, he worked for the engineering corps of the armed forces. According to Dou, Ren’s military work had little connection with his later work at Huawei but deeply influenced his management style.
Dou highlights two turning points. The shift from analogue to digital technology in the early 1990s allowed Huawei to expand production and begin supplying China’s state-owned enterprises. At that point, Ren made sure that his company was on the radar screen of the country’s top leaders. The second turning point came a decade later, when Huawei went global.
As Huawei expanded, so did its symbiotic relationship with China’s party-state. The government helped to ensure the company’s success, while Huawei supported the expansion of state surveillance. Soon after Xi Jinping came to power in 2012, he initiated the Sharp Eyes urban surveillance program and blanketed China with security cameras. In response, Huawei developed its Safe City facial recognition technology, which is now used throughout China and has been bought by countries in Asia, Africa and even Europe.
China’s national intelligence law requires organisations and individuals to ‘support, assist and cooperate with state intelligence work’, a clause that is frequently cited to justify sanctions placed on Huawei. Ren vehemently denies that Huawei has provided or would provide the Chinese state with access to its data networks. Dou is unconvinced but reminds us that China is hardly the only state that demands access to confidential telecommunications data.
Dou makes a valiant effort to dissect Huawei’s opaque organisational structure. Legally, Huawei is a limited liability company, with Ren holding about 1 percent of the shares, and the employees, represented by a trade union, holding the balance. On paper, Huawei’s highest authority is the shareholders’ meeting, to which the board of directors and the chief executive report. However, Dou concludes that the formal structure has little significance, with key decisions made by a group of top executives and Ren.
Huawei’s basic law stresses that Huawei is not a Western-style company focused on maximising shareholder value. Rather, Huawei’s purpose is ‘to become a leading world-class enterprise’ in its field. Ultimately, Dou likens Huawei to the Chinese Communist Party, whose purpose is to ensure its own long-term survival....
....MUCH MORE
What Huawei has accomplished is astounding and borderline terrifying.
During the mid-to-late twenty-teens the world began to notice that the company was a serious business competitor and an extension of China's Communist Party and government.
In an attempt to assuage these concerns one of their Western honchos said:
That was in one of our posts on China's security laws which require Chinese (and foreign-domiciled!!) companies to work with the authorities when asked. I'm not sure the statement did much assuaging.
Some of our previous posts on the Chinese colossus:- As Huawei CFO Offers Husband, Children For Bail Collateral, Some Background
- Huawei Says Cell Phone Sales In China Just Fine, Thanks For Asking
- "The Register paid a visit to Huawei's HQ in Dongguan, China"
- "View from Washington: How do you solve a problem like Huawei?"
- By 2020 it was "The Chip Wars of the 21st Century":
While some people are bleating and tweeting into the ether about their political feelings, others are creating the technical container that will define, delineate, create, and constrict the future Them's the ones to watch out for.
Baaaa
- "Huawei Revs Up Intelligent Driving Push With Software Launch"
- "China’s Huawei has big ambitions to weaken the US grip on AI leadership"
- How Huawei Took Over the World
- "China denies report it spies on Trump’s iPhone, suggests he get a Huawei instead"
- Chips: "Huawei building vast chip equipment R&D center in Shanghai"
At the moment I don't think ASML has to worry but U.S. policymakers should be dusting off their contingency plans. They have contingency plans, right? I think they're in the same drawer as the CDC's pandemic response folder....
And many, many more. Quite an amazing story.
