World’s largest telecommunications equipment firm has been blacklisted by several countries and its CFO arrested

Huawei Q&A: what you need to know about the Chinese phone maker

What is Huawei?

Huawei (pronounced “Wah-Way”) is a telecommunications and electronics company based in Shenzhen in the south of China.

It is also the world’s largest telecoms equipment firm – in August it overtook Apple to become the world’s second-largest smartphone seller behind Samsung. In the second quarter of 2017 the Chinese company sold 54.2m phones, making up 15% of the share of the market.

Though its phones are popular all over the world, Huawei has been blocked by several countries from being involved in supplying equipment for the rollout of 5G networks, with governments citing national security fears.

Huawei CFO arrested in Canada on suspicion of violating US sanctions Read more

Who has blocked Huawei?

Already the governments of the US, New Zealand and Australia have moved to block the use of Huawei’s equipment in the rollout of future 5G networks.

US regulations were announced in April that banned government companies buying from any company deemed a security threat, which was thought to be a way of blocking purchases by Huawei and another Chinese manufacturer, ZTE. In July, the US lifted the ban on ZTE as part of a settlement in which the company paid the US Treasury a $1bn penalty.

In August the Australian federal government decided to bar Huawei and ZTE from supplying equipment to Australia’s 5G network, citing national security. New Zealand’s security services also blocked Huawei from supplying mobile network kit to a domestic company on national security grounds in November.

In the UK, telecoms provider BT has just confirmed it is removing Huawei equipment from key areas of its 4G network, amid concern from MI6 about Chinese firms’ presence in such infrastructure.

What are governments worried about?

Huawei is a private company. However there are fears it and other Chinese manufacturers can be compelled by the Chinese security services to help with intelligence gathering. The national intelligence law passed this year requires all organisations and citizens to assist the country’s spy agencies.

Speaking after Australia announced Huawei and ZTE would not be allowed to participate in the 5G rollout, the country’s spy chief said Huawei had been banned because it was a “high-risk vendor”. Mike Burgess, who is director-general of the Australian Signals Directorate, said the 5G network would underpin the country’s water supply, electricity grid, health systems and even self-driving cars, and so breaches due to “high-risk equipment” needed to be guarded against.

Who has been arrested?

On 1 December Canada arrested Huawei’s global chief financial officer, Meng Wanzhou, who is also the daughter of the founder of the company, Ren Zhengfei, an ex-army officer. This year she was promoted to one of four executives who serve as vice chair on a rotating basis, a move many took as a sign Meng was being groomed to take over the company.

She was detained in Vancouver while transferring between flights. A court hearing has been set for Friday. Canadian police have not provided more information about the arrest but Reuters reported that Meng was arrested on suspicion of violating US sanctions against Iran. She faces extradition to the US.

US authorities have been investigating Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws, sources told Reuters in April. Beijing has protested against the arrest of Meng and demanded her release.

What does China say?

The Chinese embassy in Canada released a statement saying China, “firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim.”

“The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms Meng Wanzhou,” it said in a statement on its website.

The editor of China’s often stridently patriotic state-run tabloid, the Global Times posted on Weibo: “It is clear the US is pushing the battle line to our door… We can completely regard the US arrest of Meng Wanzhou as a declaration of war against China.”

When Australia announced Huawei would not be allowed to be involved in the 5G network, China’s commerce ministry said: “The Australian government has made the wrong decision and it will have a negative impact to the business interests of China and Australia companies.”

In June, Huawei’s Australian chairman John Lord said Huawei would refuse to hand over data on Australian users to China, saying such an order would be “completely illegal”, calling the block of Huawei from the 5G network “short-term and small-minded”, and that many concerns about Huawei were “uninformed or just plain wrong”.