Huawei Gives Transparency A Try, Names Board Members

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Huawei’s US expansion plans have been thwarted several times now by the US government. In addition to complaints about Huawei’s supposed ties to the People’s Liberation Army and its presence in the sensitive telecom sector, US critics have also cited its murky corporate structure.

I wrote about its latest rejection this past February:

The most recent blade sunk into Huawei’s expansionist guts came from the Committee on Foreign Investment in the US, a security review body commonly referred to as CFIUS, which recommended that Huawei divest itself of technology assets purchased from defunct tech firm 3Leaf last year. For several days, Huawei played it uncommonly tough, declining to go with the CFIUS fix, which would have forced President Obama to make the call. Well, yesterday they threw in the towel.

Why is this tragic? This is now the third time that Huawei’s US plans have been thwarted. They were first given the cold shoulder in 2008, when Huawei, and a group of other investors, tried to buy in to 3Com. CFIUS put the kibosh on that deal as well, resulting in a similar “voluntary” withdrawal by the Chinese company.

A couple years later, when US telecom company Sprint solicited bids for equipment needed for an upgrade of its cell phone network, Huawei (and fellow Chinese firm ZTE) participated, at least for a while. Ultimately it was 3Com all over again, furious gnashing of teeth were heard from the usual suspects in Washington, and the bids of the Chinese firms were tossed in the dust bin.

I ended that post with the pessimistic comment that this was Huawei’s “third strike,” suggesting that the future didn’t look all that bright for the telecom giant in the US. This gloomy viewpoint had more to do with Huawei’s particular problems than the fact that it is a Chinese enterprise — I wrote about that issue a couple of weeks ago.

But of course Huawei can’t just give up on the US market. What can it do to try and mend fences with the folks in DC? It can’t change its corporate history, and it’s stuck in a sensitive commercial sector. How about transparency?

Apparently Huawei has been listening to the complaints and is trying to allay US fears.

From the Financial Times:

Huawei has for the first time made public the members of its board, in an attempt to improve transparency in order to address US concerns about its alleged links to the Chinese military.

The biggest change in the Chinese telecoms equipment maker’s annual report for 2010, to be published on Monday, is that Huawei has included for the first time a list of names, pictures and biographies of the people who run the company.

Will this pave the way for future US deals for Huawei? I’d like to say yes, but after some of the statements I’ve read from US legislators, I have a feeling that some folks in D.C. made up their minds a while ago that Huawei is persona non grata. This latest goodwill gesture may not be enough to change those minds.

For more on the topic, you can listen to me and Josh Gartner talk Huawei and CFIUS on the China Policy Pod from last February.

5 responses on “Huawei Gives Transparency A Try, Names Board Members

  1. Joyce Lau

    I find it astounding that something as basic as naming the people who run a company is seen as some newfangled step and “good will gesture.”

    Isn’t that what all decent companies already do? I’ve never heard of a Hong Kong (or London, or New York) company with an annual report that doesn”t name the members of its board.

    Never mind pleasing DC. Shouldn’t Chinese companies be transparent just for the sake of the Chinese public?

      1. Joyce Lau

        Hiya Stan — This is outside my usual sphere on knowledge. I’m not an expert on corporations!

        I know that private companies are not obliged to release as much information as public ones.

        But I Googled “board of directors” and the names of several major, international privately-held firms — Chrysler, PWC, Ernst & Young, Credit Suisse, etc — and very easily got a list of people on their board of directors, even on their company websites or on a Bloomberg / BusinessWeek database.

        I know that not all private companies release these details, especially not smaller ones. But it seems like big, international ones generally do. Correct me if I’m wrong.

        Huawei calls itself a global corporation in the telecom field. I’m not saying they are legally obliged to provide information about themselves, but it just doesn’t seem that surprising to me that they would if they’re trying to build up confidence for overseas mergers.

        Secretive giant private corporations make me uneasy no matter where they’re from, but that’s a whole other kettle of fish.

        1. Stan Post author

          You’ll find that older, Western private corporations will be more transparent, and also have more independent directors, than younger companies (and definitely large Chinese enterprises). I think that closely-held family corporations are also less likely to be transparent, but that’s a separate issue.

          This took quite a long time to happen in the West, so it will take a while for this to catch on here. For Huawei to add independent directors and to get the information out is a good step forward.

    1. pug_ster

      Even if Huawei had named the Board of Directors, the US government have excuses to exclude them anyways (IE, fears of Ren Zhengfei working for the PLA) and US won’t do business with them unless some of its board members include some westerners.