What Does Huawei Think About the U.S. House Intelligence Committee Report?

October 29, 2012

Since the U.S. House Intelligence Committee Report on Huawei and ZTE was issued earlier this month, we haven’t heard much from either of the two Chinese telecom companies. I’m not sure anything they say at this point matters that much in terms of government action or public opinion, but I’m sure many of us have lots of questions about their strategy and plans for the future.

CNN has the goods on this story, scoring an interview with Scott Sykes, Huawei’s vice president for corporate media affairs. I’m not going to cut and paste the entire interview, but I’ll give you the questions and the gist of the answer, with a few comments of my own thrown in for entertainment.

1. What was your reaction to the House Intelligence Committee report?

It is just very disappointing. We engaged with the committee in good faith throughout the investigation.

What followed was a list of all the ways Huawei cooperated with the investigation. As I said a few weeks ago, I tend to believe them. They did give the investigators unprecedented access, and as a result may indeed be slightly dumbfounded at the result. However, this is a company that has had transparency issues for years, and “unprecedented access” did not translate into “adequate access.”

Sykes also suggests that Huawei should be treated the same as any foreign telecom company. I agree in principle. I would also guess, however, that if Ericsson was scrutinized in the same way, it would probably be more transparent and therefore pass muster quite easily. It sucks and must seem incredibly unfair to Huawei (and a lot of other folks), but from the perspective of the U.S. government, the problem really is that Huawei is a Chinese company.

2. Where does Huawei go from here?

We need to keep talking and sharing our story.

Maybe I’m just too cynical, but it seems to me that the House investigation was the opportunity to do just that, and it didn’t work out. I’m therefore not all that optimistic that a near-term PR blitz is going to help Huawei all that much.

3. It has been suggested that listing Huawei on an international exchange would take some heat off the company. Have you hired bankers to look at options?

Sykes answered in the negative, and I’m not sure at this point whether that would help all that much anyway. Yes, listing would force Huawei to disclose certain information, but the main sticking point, Huawei’s relationship with the Chinese government (or lack thereof) wouldn’t be resolved with the kind of disclosure required by an IPO.

4. What else can you do to encourage trust? Can you show governments your source code?

Yes, and we are already doing that today.

I wonder whether this would have helped the House investigation? I’m skeptical. Keep in mind that the House report basically says that the worry was future activities, and that the investigation was not necessarily looking for evidence of past/current wrongdoing.

Looking towards the future, this might help, but again, so much damage has already been done that I’m not even sure when Huawei will even be in the position to offer up its source code in the hopes of getting a stamp of approval.

5. Did the House Intelligence Committee ask to see your source code?

There was no specific request as far as I know. But are we willing to do it? Of course.

If neither side brought it up during the investigation, perhaps that tells us something, hmm? Actually, several possibilities, including: 1) it wouldn’t have mattered anyway; 2) the House committee wasn’t looking for current problems; and/or 3) Huawei wasn’t throwing out creative solutions of its own.

6. The House committee claimed to have uncovered criminal wrongdoing by Huawei officials, including fraud and bribery. Their report said those cases would be referred to the Justice Department. Have you been contacted by any law enforcement officials?

Sykes responded with a “no,” saying that since the parts of the report that cover these issues are classified, Huawei doesn’t even know how to respond. He then talked about rule of law, how the evidence should be released, etc. I understand Huawei’s frustration, particularly since these vague charges were just thrown out there, and Huawei was left to twist in the wind with no way to respond. If the House committee was looking to intentionally screw around with Huawei’s public image, they certainly did a good job of it.

But that’s the House committee. If there is indeed an investigation being conducted by the Justice Department, that agency has a formal procedure, and Huawei will be notified at the appropriate time if and when this is going to proceed to something serious.

7. Are you seeing much return on your lobbying and public relations efforts in Washington?

I think it is having an impact.

I’m not sure what Sykes means by “impact,” and whether it’s good or bad. And I’m not trying to be flippant here. This House investigation was a huge setback, so it’s hard for me to take this statement seriously. I know Huawei has spent a few years, and a lot of money, on PR and lobbyists, but I’m simply not seeing the concrete results. Originally, I thought the investigation and committee hearing was the fruition of all that effort, but that did not exactly go as planned, did it?

8. Is there a risk that, despite your investments and lobbying, the U.S. market will never open to Huawei?

The tone is slowly changing. I think the fact we are engaging is helping, and telling our story is helping.

I’m sorry, but this seems like wishful thinking. Sykes does admit that it will take time. So I guess the question is what kind of timeline are we looking at here?

9. Huawei founder Ren Zhengfei is notoriously media-shy. Would more openness on his part help improve the company’s position with U.S. lawmakers?

It is true that he has never given any media interviews. And I would speculate that he probably never will, at least not in any prolific way.

It’s kind of like: “Tell me why I should?”

If pressed, I think I could come up with a good reason.