HUAWEI: HISTORY, PRODUCTS AND CONTROVERSIES

HUAWEI

Huawei Technologies Co., Ltd. is the world's largest manufacturer of telecommunications equipment and second largest manufacturer of smartphones.. Based in Shenzhen, this Chinese multinational technology corporation develops, designs and markets consumer electronics, telecommunications equipment, and various smart devices and provides services in these sectors. Huawei posted a record US$122 billion in sales in 2019 and was ranked the second-largest research and development (R&D) investor in the world by the EU Joint Research Centre (JRC) in 2021. [Source: Wikipedia, Bloomberg]

Huawei (pronounced “Hwaa way”) is an employee-owned company with a lot of support from the Chinese government. Founded in 1987 by Ren Zhengfei, a former Deputy Regimental Head in the People's Liberation Army, it initially focused on manufacturing phone switches but over the years expanded into include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China. In recent years it it has become a major player in the manufacturing of communications devices for the consumer market. Huawei’s main rivals have been Cisco and Ericsson. It has won business away from Cisco by developing switches and routers at lower prices.

Huawei Songshan Lake New Campus in Dongguan, near Shenzhen, features buildings that are replicas from European cities. According to Bloomberg: At a new 400-acre research-and-development center on China’s south coast, Huawei Technologies Co. engineers chat, tap at their phones, or chill out on a small electric tram that whirs them between buildings modeled variously on the Sorbonne or England’s great universities. They move through neighborhoods built in the style of Versailles or Renaissance Italy, passing by some of the 3,000 gardening and maintenance staff needed to keep the vast parklands immaculate. “On this Disneyland-like corporate campus about an hour and a half’s drive from Hong Kong, Huawei seems to be basking in the wealth from its leadership in 5G mobile technology. No other company has done more to project the image of a technologically advanced China on the international stage. And no other company stands as a greater symbol of China’s engagement with the outside world. At its corporate headquarters in Shenzhen, lavish reception rooms for visitors are modeled on Japan’s old Kyoto, with refreshments intended to make executives feel at ease before being pitched for deals on telecom hardware. [Source: Jeff Black and Allen Wan, with Zhu Lin, Bloomberg, September 30, 2020]

Huawei had revenues of US$99.9 billion in 2021, with an operating income of US$11.08 billion in 2020 and a net income of US$17.83 billion in 2021. As of 2020, its total assets were US$134.01 billion and its total equity was US$50.49 billion. Huawei had 197,000 of employees in 2020 up from 194,000 in 2019. Ren Zhengfei is the founder & CEO; Liang Hua is chairman; Meng Wanzhou is the deputy chairwoman & CFO; and He Tingbo is the director. Among its products and services are mobile and fixed broadband networks, consultancy and managed services, multimedia technology, smartphones, tablet, computers and Dongles Smart TV. Huawei has sales in about 170 countries. It ranked fifth in the world in US patents according to a report by Fairview Research’s IFI Claims Patent Services. The company applied for more international patents than any other firm in 2008. [Source: Wikipedia, Bloomberg, Wall Street Journal]

Ren Zhengfei: the Founder and CEO of Huawei

Ren Zhengfei (born October 25, 1944) is a Chinese entrepreneur and engineer who is the founder and former CEO of Huawei Technologies. In April 2021, the Forbes Global Rich List ranked him as the world’s 2378the richest man, with a net worth US$1.3 billion. Ren now serves as a deputy chairman of the Board of Directors, but he is not among the current three rotating CEOs. Ren holds 1.42 percent Huawei’s shares, valued at US$450 million in 2010. Huawei is essentially independent of Ren because its shares are held by its employees, but the ownership structure remains opaque. Time magazine included Ren in its list of 100 most influential people in 2005. [Source: Wikipedia]

Ren was born in Zhenning County, Guizhou, one of poorer provinces of China. His grandfather was a master chef and expert in curing ham from Rendian Village, Pujiang County, Zhejiang. His father,Ren Musheng failed to complete his university studies when his father died a year prior to his graduation. During the Japanese occupation, Ren Musheng moved to Guangzhou to work in a Kuomintang government arms factory as an accounts clerk and later became as the president of No. 1 Middle School of Duyun, where he met Ren Zhengfei's mother Cheng Yuanzhao, a teacher at the school. Ren Musheng became a member of the Communist Party in 1958. Ren Zhengfei has five younger sisters and one younger brother.

Ren Zhengfei in 2014

Ren went to primary and middle school in a remote mountainous town in Guizhou. In the 1960s he studied at the Chongqing Institute of Civil Engineering and Architecture (now Chongqing University). After graduated he joined the People's Liberation Army (PLA) research institute to work as a military technologist reportedly in the PLA's Information Technology research unit in Mianyang, Sichuan. He worked as a civil engineer until 1974 when he joined the military's Engineering Corps and helped set up the Liao Yang Chemical Fiber Factory.

Ren was unable to join the Chinese Communist Party for a long time because of his father’s ties to the Kuomintang. He worked as a technician, engineer and was promoted to a Deputy Director. During this time, Ren achieved a number of technology advancements for which he was recognized and selected as a delegate from PLA to attend the National Science Conference in 1978. In 1983, Ren retired from the army when the PLA downslized. After becoming a civilian, Ren moved to Shenzhen and worked in the electronics industry there.

In 1987, Ren founded Huawei Technologies Co. Ltd with 21,000 yuan (around US$5,000). Initially, Huawei was a contractor for selling, installing and maintaining server switches and equipment for a Hong Kong dealer in China. According to Bloomberg: Huawei began with its founder, Ren Zhengfei, repeatedly crossing the border, importing telephone switching gear from Hong Kong that he then resold to customers in China who were desperate for upgraded communications. " In 1992, Ren pushed Huawei to develop the C&C8 server switch, which sold at a third of the market price at that time and made the first successful boost of Huawei. Due to Ren's background in the PLA, Huawei was rewarded with Chinese government contracts in data center building and telecommunications construction of 4G networks.

Meng Wanzhou

Meng Wanzhou (born February 13 1972) is the daughter of Ren Zhengfei and the chief financial officer (CFO) of Huawei. Also known as Cathy Meng and Sabrina Meng, informally known in China as the "Princess of Huawei", she serves as the deputy chair of the board at Huawei. In December 2018, she was arrested at Vancouver International Airport and became center of a bitter dipsute between China and the U.S. and Canada (See Below). [Source: Wikipedia]

Meng Wanzhou was born in Chengdu, Sichuan, China. She is the daughter of Ren Zhengfei and his first wife, Meng Jun. Meng Wanzhou adopted her mother's surname when she was 16. After graduating from college in 1992, she worked for China Construction Bank for a year before joining Huawei, when it was still regarded as a startup, and worked as a secretary. She earned a master's degree in accounting from the Huazhong University of Science and Technology. She moved to Vancouver, Canada, and obtained permanent residency in 2001, but her Confirmation of Permanent Residence expired in 2009. Meng also has had Hong Kong permanent residence since at least 2011.

In an interview with the Chinese newspaper 21st Century Business Herald, Meng said her career took off after she returned to Huawei in 1998 to work in the finance department. She held positions including head of international accounting, chief financial officer (CFO) of Huawei Hong Kong, and director of the Accounting Management Department. When Huawei first published the names of its top executives in 2011, Meng was already listed as its CFO

Huawei’s Expansion and Growth

“Rising up from humble beginnings in Shenzhen in 1987, Huawei started out as a producer of phone switches. Growing up with the city’s nascent electronics industry, Huawei would became the global leader in telecommunications networks by 2012 — despite a ban by the US government and its knee-jerk ramifications. [Source: Wade Shepard , Forbes, May 25, 2016]

Huawei headquarters in Shenzhen

Huawei and its Chinese Chinese ZTE, another telecommunications equipment company also based in Shenzhen, have had great success selling telecommunications equipment in the developing world. In Nigeria, for example, they were able to take 50 percent of cell phone market between 2003 and 2007 by offering handsets that were as much as 40 percent cheaper than those sold by companies like Ericsson and Alcatel-Lucent. Huawei has also been awarded contacts in Colombia, Venezuela, Uruguay, Russia, Vietnam, Pakistan, Indonesia, Bangladesh, Morocco, Tajikistan, and Saudi Arabia,

Huawei has long had its overseas expansion supported by China Development Bank, which in 2004 extended a five-year, $10 billion credit line and routinely has lent money to foreign buyers to finance their purchases of Huawei products. Huawei’s revenues rose more than 200 percent in the late 2000s as it became one of the top three telecommunications companies, along with Nokia Siemens Networks and Telefon AB LM Ericsson.

Huawei had overseas sales of $2.2 billion in 2004 and aimed to raise that figure to $4 billion in 2005. Huawei offered to install a a free mobile phone network in the London Underground in time for the 2012 Olympics. The project would have involved installing mobile transmitters on the ceilings of the tunnels so travelers could make and receive calls.

On Huawei’s effort to break into the U.S. in the early 2010s, Associated Press reported: Huawei, is pushing into the U.S. market under its own power, and with a Chinese-sounding name. “U.S. phone companies are well acquainted with Huawei, which sells network equipment and accessories like wireless modems for laptops. It had $1 billion in sales in the U.S. in 2011. Globally, it's a big seller of phones as well. The company expects to ship more than 100 million in 2012. Of those, it expects 60 million to be smartphones. When it started selling phones in the U.S. in 2010, Huawei continued to let the carriers take care of marketing. Its phones are sold under the Huawei brand by some smaller phone companies, like MetroPCS, but the phone AT&T sells doesn't carry Huawei's name — just AT&T's. Sprint Nextel Corp. and T-Mobile USA also sell a Huawei phones.

On growth in the mid and late 2010s, Wade Shepard wrote in Forbes: Huawei “bought into their government’s rhetoric about innovation fully, investing $9 billion into research development in 2015 alone, which was far more than even Apple. The Chinese upstart had over 76,000 employees in 2016 tasked with research and development in 21 centers around the world. “Last week I walked into an electronics shop in Tallinn, Estonia and saw that their feature rack was an even mix of Huawei and Samsung. The salesman spoke positively of the Huaweis. "But Huawei used to be really bad,” I commented. “Why are they so good now?" "They've just grown up,” he spoke simply. [Source: Wade Shepard , Forbes, May 25, 2016]

“A full half of Huawei’s 100+ million handset sales and 65 percent of the company’s revenue in 2015 derived from markets outside of China, as the company’s market share rapidly rose in countries like Germany, Italy, and Spain. Huawei's transition appears to be working out. The company reeled in $5.7 billion in profits in 2015 and is now ranked 228th on the Global Fortune 500 list, and was recently named to Interbrand's 100 best global brands -- the first Chinese enterprise to obtain this distinction.

Huawei Smartphones

Scott Cendrowski wrote in Fortune: In recent years Huawei has broken out of the pack, becoming the No. 3 smartphone maker in the world and the first Chinese phone maker with a substantial global footprint. Huawei's decades of experience making and selling telecom networking equipment helped it build better phones and establish relationships in markets worldwide — with the conspicuous exception of the U.S. — boosting its profile and its profit margins. [Source:Scott Cendrowski, Fortune, January 25, 2017]

Wade Shepard wrote in Forbes in 2016:“Dumping their previous business model of flooding the planet with cheap, unbranded cellphones, Huawei has risen to become a globally recognizable brand and a serious contender for Apple and Samsung. Advancing rapidly into new markets worldwide, Huawei is now the world’s number three smartphone brand, with an 8.3 percent market share. Europe, in particular, has been receptive of Huawei, where the company is growing at an unprecedented clip on the back of better products and a new brand image.

Huawei's profit surged 33 percent in 2015 after China's largest maker of telecommunications gear grabbed market share with premium smartphones and mobile carriers expanded their high-speed networks globally. “However, where Huawei now stands to make the most waves is with its prime consumer product: smartphones. Last year, the company sold 108 million of them — which is still far behind Samsung and Apple, at 324 and 231 million units, respectively, but the gap is closing fast. This year, Huawei’s trajectory is looking even steeper, as quarter one saw 28.8 million phones sold, more than a 10 million unit year-on-year increase, while Samsung stayed flat and Apple actually went into decline. “This new global market position was obtained through a very active initiative to drastically increase the quality of their feature phones as well as major ad campaigns designed to let the world know that Huawei has arrived.[Source: Wade Shepard , Forbes, May 25, 2016]

“Huawei once found their niche selling handsets cheaper than the big brands of the world, reaching for low hanging fruit rather than the premium tiers soaring at the top of the consumer tree. My first Android device was a $100 Huawei that I picked up in 2012 in Jiangsu province. It was mediocre but cheap -- a tagline that could sum up public sentiment about the brand at that time. But all of this has changed for Huawei. Beyond China, they are the undisputed number one smartphone brand.

Huawei Unveils “Fastest Smartphone in the World” with a Few Hiccups

Huawei P40 Pro

In February 2013, Associated Press reported: Huawei, which recently became the world's third-largest maker of smartphones, calls its new flagship product "the fastest smartphone in the world" and wants to use it to expand global awareness of its brand” but “parts of the presentation of the phone at a press conference Sunday in Barcelona, Spain, suggest that the company has some way to go in polishing its pitch for a global audience. “Richard Yu, head of Huawei's consumer business group said the new phone can be programmed to display more than 100 different "themes," or looks. This is important because "ladies like flowers, colorful things," Yu said. “Yu also said Huawei is learning from Apple how to make Google's Android software easier to use, a lawsuit-friendly utterance considering that Apple is on a global campaign to sue makers of Android phones for copying from the iPhone..[Source: Peter Svensson, Associated Press. February 24, 2013]

“The new phone, the Ascend P2, will have a 4.7 inch screen. Yu said it will be available in the April to June time frame for about $525 without a contract. It's the "fastest" because it supports faster download speeds than other phones. However, today's wireless networks aren't equipped to supply those speeds. ."

“Huawei Technologies Ltd. was the world's third largest seller of smartphones, after Samsung and Apple, in the fourth quarter of 2012, according to research firm IDC. That's despite selling very few phones in the U.S., where the big phone companies mostly ignore it. It has a much better position in Europe, where cellphone companies have embraced its network equipment, and France's Orange is committed to selling the phone.

Huawei in Europe

Wade Shepard wrote in Forbes: Huawei has advanced aggressively into new markets, with a heightened focus on Europe, where they are the continent's number two Android phone and, in some markets, number two overall. “I went to my shop and they advised me instead of getting a Samsung maybe this Huawei is better,” said Bogdan Goralczyk, the Polish Sinologist, author, and former ambassador. “More and more people are starting to realize that it’s not as shit anymore, that it is not a fake product, that it is much better than we expected. It is changing the mentality of the people; they are starting to think, ‘China, wow, that’s impressive.’” [Source: Wade Shepard , Forbes, May 25, 2016]

“Huawei launched its new flagship phones, the P9 and P9 Plus, in London in April, 2016. The phones feature cutting edge duel-lens cameras, which allows in more light to improve photo quality, a better battery, innovative biometric fingerprint technology, a Kirin 955 2.5GHz 64-bit ARM-based processor, and a high-quality aluminum body with aesthetically pleasing and ergonomically contoured rounded corners. The phone is not only meant to function at the highest level and to push new features into the market, but to look good too — a major demand of the Chinese consumer in particular.

“Huawei has also engaged in some very high-profile partnerships to develop some of their new products and features. Right next to the duel lenses of the P9 is written the word “Leica,” the name of the prominent German photography company who designed it. Huawei also produced Google’s Nexus 6P and is currently working with Swarovski to design a fashionable smartwatch for women.

“Huawei’s dramatic rise in European sales was initiated by an improvement in product quality but was also complimented by a very high profile advertising blitz. Ads and promotions for Huawei now cover the trams of Rotterdam, a flagship store sits in a prominent location in downtown Brussels, entire buildings are being covered with gigantic Huawei banners in places like Berlin and Lodz, Poland, the roadsides of major highways are speckled with billboards for Huawei, and the city center of Warsaw looks like an advertising convention where Huawei was the guest of honor. This campaign has also included the sponsorship of popular soccer teams like Arsenal, AC Milan, and Paris Saint-Germain, endorsements from star European athletes like Lionel Messi and Robert Lewandowski, as well as key product launches in European cities. Basically, Huawei figured out what Europeans like and stuck their logo on it.

Secret of Huawei’s Success

On the secert behind Huawei’s rapid growth Chen Lifang, the President of the Public Affairs and Communications at Huawei, told the Wall Street Journal: If you ask me about the success factors, there are three. The first is we value R&D investment, technology and innovation. In the past 10 years, we invested $25 billion. We really value management. When we were still very small, our CEO and founder, Ren Zhengfei, said, “We can learn. We should learn management experience from other companies.” So we invest heavily in management. The third success factor is our employee shareholding mechanism. This enables employees to share the success of the company. We have 84,000 employees that have company shares. And the biggest shareholder is Mr. Ren, our founder. He only has 1.4 percent of the company shares.[Source: Wall Street Journal, November 2, 2014]

“Innovation depends on four factors. The first one is about market. Only with a big market that can attract companies to make more investment. China does have that. The second factor is talent. You need a good talent pool to generate good ideas. China has an advantage because of the large number of graduates. Another factor is economic development. If we can enjoy continued and sustainable economic development, that would be a huge attracting factor for people to make investments. China is also quite good on that. The fourth one is about mechanism. America has the best innovation mechanism to motivate so many people and so many companies to continue to innovate. China is also making progress.

Huawei’s Problems

Huawei in Berlin

According to Reuters: Huawei’s ambitions to challenge U.S. tech dominance are now stymied by strains in relations between China and countries including the United States, India, Australia and Britain. Huawei is set to lose billions of dollars a year in revenue from bans on its network equipment, and more countries could follow the United States, Britain and others in blocking the company's gear.[Source: Reuters, July 27, 2020]

According to Bloomberg: “Huawei’s vaulting ambition to be at the forefront of future-defining technologies has landed the company in the crosshairs of the U.S. and other governments that see it as a conduit for the geopolitical objectives of the Chinese Communist Party. In mid-August 2020 the U.S. Department of Commerce, at President Trump’s direction, handed down yet another round of restrictions aimed at cutting Huawei’s access to commercially available computing chips it needs to make 5G base stations and smartphones...Tthe list of nations that see Huawei as a proxy for China’s geopolitical ambitions is growing. Following the U.S. lead, the U.K. is banning the company from its next-generation 5G networks and requiring that Huawei technology already installed in existing equipment be stripped out by 2027. Australia has shut the company out, as has Japan. India may curb Huawei and its tech neighbor in Shenzhen, ZTE Corp., from its networks as relations between the two states deteriorate." [Source: Jeff Black and Allen Wan, with Zhu Lin, Bloomberg, September 30, 2020]

Huawei tried to acquire 3Leaf System, a U.S. computer company, but backed of the deal in February 2011 after a security panel refused to approve the deal. Sprint Nextel Corp. excluded Huawei and fellow Chinese telecom company ZTE Corp. from a contract worth billions of dollars, prompted by U.S. fears that the companies had ties to China's military. The Sprint decision was a setback for Huawei in the one major market it has had difficulty penetrating, the U.S., and showed how mounting concerns over China's policies were starting to exact a cost. Huawei has also faced complaints in Europe that Chinese government backing gives it an unfair advantage. Both Huawei and ZTE have said their equipment poses no threat to U.S. security, and deny benefitting unfairly from government support.

Associated Press reported: “In the U.S., a congressional panel recommended in October 2012 that phone carriers avoid doing business with Huawei or its smaller Chinese rival, ZTE Corp., for fear that its network equipment could contain "back doors" that enable access to communications from outside. The Chinese government rejected the report as false and an effort to block Chinese companies from the U.S. market. “Meanwhile, a report by a private U.S. cybersecurity firm concluded that a special unit of China's military is responsible for sustained cyberespionage against U.S. companies and government agencies. China has denied involvement in the attacks in which massive amounts of data and corporate trade secrets, likely worth hundreds of millions of dollars, were stolen. .[Source: Peter Svensson, Associated Press. February 24, 2013]

Chen Lifang told the Wall Street Journal: , Those are just accusations. There are no facts substantiating that. There are three billion people using our equipment and our solutions. This is a good track record. In the future, we’ll continue to make efforts on safeguarding the security of the network. “In the past two years, we made a lot of efforts. Security has already been embedded in every technology, every product, every process. And we made a lot of investments in security technology. In the future, for 5G and smartphones, the security technology related to that, we also made a lot of investment to make sure those phones would not be hacked, and the data is safe. Huawei has never received any requests from the Chinese government asking us to do anything or implying we should do anything. We have a principle: Trust no one. I will go through rigorous tests and validation. For example, the equipment we sell in the U.K., the U.K. government testing body will test that and tell us the feedback. [Source: Wall Street Journal, November 2, 2014]

Google's Eric Schmidt: “Huawei Has Engaged in Unacceptable Practices”

Google founder and former boss Eric Schmidt told the BBC. Huawei presents allenges to national security, adding that the West should respond by competing with China and its technologies, rather than disengaging. Schmidt now heads the Pentagon's Defence Innovation Board. "There's no question that Huawei has engaged in some practices that are not acceptable in national security," Mr Schmidt told a BBC Radio 4 documentary.[Source: Gordon Corera, BBC, June 19, 2020]

“He said it was possible to think of the company as a means of "signals intelligence" — a reference to spy agencies like the UK's GCHQ or NSA in the US. “"There's no question that information from Huawei routers has ultimately ended up in hands that would appear to be the state," Mr Schmidt said. Huawei has consistently denied accusations that it is an arm of the Chinese state, or passes on customer data to the authorities. "The allegations made by Eric Schmidt, who now works for the US government, are simply not true and as with similar assertions in the past, are not backed by evidence," Victor Zhang, Huawei's UK chief told the BBC. "Huawei is independent from any government, including the Chinese government.”

Schmidt says the real issue with Huawei lies in the challenge to US leadership it represents: a Chinese company operating on a global stage that is building a better product than its competitors. "It's extremely important that we have choices," he told the BBC. "The answer to Huawei... is to compete by having a product and product line that is as good."

Mr Schmidt views the decoupling of the technology sectors in China and the US as "undesirable", believing it will lead to two distinct systems. "Once you diverge these global platforms, you don't get them back," he says. "We benefit from having a common platform of interchange... and I worry that by building these platforms separate, the countries will understand each other less. China's going to dominate whether we couple or decouple. They have the resources, they have the money, they have the technology. The question is do they operate on global platforms or do they operate on their own platforms? The more segregated the platforms are, the more dangerous it is. It is in the West's interest that every technology platform has Western values in them.

Huawei Documents Reportedly Show Involvement in China's Surveillance Efforts

In 2021, Endgadget reported: “Huawei has long denied working with the Chinese government to spy on other countries and China's own citizens. But according to The Washington Post, it has reviewed 100 PowerPoint presentations from the company that can show how it's linked to China's surveillance projects. While many of the slides were marked confidential, they were reportedly posted on a public-facing Huawei website until they were removed in 2020. [Source: English Mariella Moon·Associate Editor, Endgadget, December 15, 202]

“The Post has published a handful of the slides translated into English, including one pitching a technology that can help authorities analyze voice recordings by comparing them against a large database of recorded "voiceprints." It's supposed to help with matters of national security, and as the publication notes, that means it could be used to identify individuals involved in political dissent, Hong Kong and Taiwan matters and discussions surrounding ethnic relations.

“Another slide shows a comprehensive prison surveillance system, which has apparently been implemented in prisons in Inner Mongolia and Shanxi province, as well as detention centers in the Xinjiang region. Detainees of Xinjiang's internment camps, mostly members of the Uyghur ethnic group, accuse their operators of forced labor, torture and detaining them without charges.

“Another slide details how Huawei's surveillance technologies have been in use in Xinjiang since 2017 and how its facial recognition technology helped capture "a number of criminal suspects." Yet another shows a surveillance system that can pinpoint the location of "political persons of interest" using their electronic devices. It's reportedly in use right now in Guangdong, which is China's most populous province.

“The Post admits that it can't confirm who the slides were shown to or when, but many of them were created back in 2014 and were edited as recently as 2020. A Huawei spokesperson told the publication, though, that the company "has no knowledge of the projects mentioned in the Washington Post report" and that it provides "cloud platform services that comply with common industry standards."

Arrest of Meng Wanzhou, Daughter of the Founder of Huawei

Meng Wanzhou in 2021

Meng Wanzhou, chief financial officer of Huawei and daughter of the telecoms giant's founder, was arrested in Canada in 2018 and became the focus of a major diplomatic dispute between China and the U.S. and Canada. The BBC reported: “When Meng Wanzhou's flight landed in Vancouver on 1 December 2018, she was expecting to make only a brief stopover. But after almost a three-year prolonged stay, she is now a free woman. In September 2021, prosecutors announced that a request to extradite her to the US had been dropped. During the three years of intense legal battles, Canada was caught in the escalating tension between Washington and Beijing. [Source: Gordon Corera, BBC, September 25, 2021]

“At the centre of the story is a sixteen-page corporate PowerPoint presentation. When her plane from Hong Kong landed, Meng Wanzhou planned to go to a house she owned in the Canadian city to collect some luggage before catching another flight to Mexico for a corporate meeting. But instead she was questioned by Canadian border security agents for three hours as her phone was seized and luggage searched. When that was over, she was formally admitted into Canada. It was at this point that the Royal Canadian Mounted Police moved in and arrested her because of an extradition request filed by the US. The US wanted Ms Meng to stand trial on charges including fraud linked to the alleged violation of US sanctions against Iran, allegations she “The PowerPoint was used by Ms Meng at a meeting with the bank HSBC on 22 August 2013, and is seen as key evidence against her. Reuters news reports in the preceding months had raised questions about whether there had been a breach of trade sanctions on Iran by Hong Kong-based firm Skycom. At issue was whether Skycom, a telecoms equipment seller, was simply a business partner of Huawei's — or a front for it to conceal its activities in Iran.

“The US alleged that in the meeting — the one with the PowerPoint presentation — Ms Meng misled HSBC over the true nature of Huawei's relationship with Skycom and this, in turn, put the bank at risk of violating sanctions against Iran. Her lawyers said the US misled the court, in particular about the PowerPoint, by omitting key information on two slides which showed HSBC was not, in fact, being kept in the dark about the true nature of the Skycom/Huawei relationship.

“Ms Meng's lawyers launched a multi-pronged attack on the US extradition request itself. An initial attempt to claim that the crime for which she is charged in the US is not a crime in Canada failed (although that can be appealed).. Another challenge centred on politics around the case. Her lawyers claimed that comments made by US President Donald Trump, which indicated a willingness to use the case as a bargaining chip in trade negotiations with China, constituted an abuse of process. Another challenge related to her treatment at the airport in Vancouver. Her lawyers argued there was an abuse of process in the way she was treated. They fought to have certain documents disclosed, including from the Canadian Security Intelligence Service, and sought to uncover what role US officials might have played in her arrest at the time. A judge turned down requests for some documents.

“Meng Wanzhou's case has been closely watched in Canada and abroad. It was thought that the case could take between five and 10 years to come to a conclusion. In August 2021, Ms Meng appeared in court as a judge heard the final arguments about whether to send her to the US. Her case was also raised in high-level discussions between senior US and Chinese diplomats. After that the US Department of Justice (DOJ) announced it had reached a deferred prosecution agreement. This means that the DOJ will hold off from prosecuting Ms Meng until late next year and if she complies with conditions set by the court, the case will eventually be dropped. Within hours, she had left Vancouver on a plane bound for China.

“The impact of the case has rippled far and wide. The arrest of such a high-profile business figure led to anger in China. The country's ambassador said China had been "taken advantage of" and made an "accomplice" by America as Washington carried out a "barbaric act of bullying".The whole affair “has led to concern that Western businessmen and other travellers could find themselves detained by China to be used as bargaining chips. Two Canadians were detained days after Ms Meng's arrest. Michael Kovrig, a former diplomat, and Michael Spavor, a businessman, were later charged with spying. China has denied any link but the pair's detention was widely interpreted as a direct response to Ms Meng's arrest. In August 2021, a Chinese court sentenced Spavor to 11 years in prison. Then hours after a Canadian judge ended extradition proceedings against Meng, it was revealed that China had released the two men and they were flying home.

Image Sources: Wiki Commons, except the smart phone from Huawei

Text Sources: New York Times, Washington Post, Los Angeles Times, Fortune, Forbes, Wikipedia, The Guardian, the BBC, Time, Reuters, AP, AFP and various books and other publications.

Last updated May 2022