Huawei revisited

Nice work by the Sinica podcast team this week. In the latest episode they trawl through the Huawei story, describing the company as kind of emblematic of China - successful and capable but still treated with suspicion.

OK - China deserves its doubters. But Huawei is a genuine business and it's good to see it getting some insightful treatment. The Sinica number follows this thoughtful piece in The Economist a month ago and this exhaustive story on CNET last week.

Sinica host Kaiser Kuo referenced this Jamestown Foundation research which notes that companies such as CETC are clearly linked to the PLA in a way that Huawai and ZTE are not. Yet it was Huawei that received an 11-page letter from a congressional committee.

David Wolf, who’s recently published a short history of China's telecom equipment sector, observed that if you navigate through the miasma of fear and loathing about Huawei there’s only one fact – Ren Zhengfei was previously a PLA officer. Other issues, such as Cisco’s lawsuit over a Huawei router, Huawei’s Iraq sanctions-busting and China cyber attacks, are also elided into the case against. But beyond Ren’s undistinguished military career – nada. 

As the Sinica guys point out, it would help if Ren himself came out from behind the curtain. Presumably he’s wary about the foreign media. But that hasn’t stopped him pushing his management team out to front the press. Acting CEO Eric Xu did a star turn at analysts’ day in April, so expect to see more of those.

All this white-anting of Huawei disguises what an interesting company it is. 

As a private firm it was never a national champion; in fact it had to climb over several designated favourites to get where it is now. And right now it’s a $32 billion company, three times bigger than state-owned rival ZTE. In the last couple of years Huawei appears to have correctly called the flattening of the carrier gear market and is now tacking successfully into handsets.

Huawei is a rare Chinese firm - a potential world-beater that isn’t a monopoly or run from Beijing. The protectionist and China threat lobbies may keep it out of the US , but it’s still going to get big.