While the situation most certainly reached a fever pitch this week, the tenuous nature of the relationship between Huawei and the U.S. goes back more than a decade. Here’s a brief (and incomplete) look at some of the milestones that have led us to the current situation.
Let’s start with a 2005 RAND Corporation report titled “A New Direction for China’s Defense Industry.” This is a massive report but it plants a seed that has seemingly guided federal thinking about Huawei–a deep connection between the telecom giant and the Chinese state/military. From the report: “Huawei was founded in 1988 by Ren Zhengfei, a former director of the PLA General Staff Department’s Information Engineering Academy, which is responsible for telecom research for the Chinese military. Huawei maintains deep ties with the Chinese military, which serves a multi-faceted role as an important customer, as well as Huawei’s political patron and research and development partner. Both the government and the military tout Huawei as a national champion, and the company is currently China’s largest, fastest-growing, and most impressive telecommunications-equipment manufacturer.”
OK, but how did RAND arrive at that version of Huawei’s history? To answer that question, we dive into the footnotes and examine the source material, which in this case is a 2000 article from the Far Eastern Economic Review titled “Huawei’s Fixed Line to Beijing.” In this piece author Bruce Gilley reports: “A detailed investigation of the company…based on interviews with company staff, industry figures and public information in China and Hong Kong–provides widespread evidence of strong official backing. Beijing wants Huawei to be its national champion, and it has the ability to make it happen. Not only is Huawei financially and politically supported by the Chinese government but also its origins as a military-backed company continue to pay dividends, including a contract to maintain the Chinese military’s telecoms backbone.”
So this gives us some insight into the perception that Huawei is closely aligned with the Chinese government. Now let’s take a look at how that has impacted Huawei’s ability to do business in the U.S.
An early example came in 2008 when Bain Capital Partners walked away from a planned acquisition of electronics manufacturer 3Com after officials in Washington flagged the deal due to Huawei’s minority ownership stake.
That same year Motorola sued Huawei reseller Lemko, along with some former Motorola employees, for conspiring to steal trade secrets. In 2010 that litigation was expanded to directly include Huawei. That case ultimately grew to include Nokia Siemens as well but came to a conclusion in 2011.
In 2010 Huawei purchased a Bay Area startup called 3Leaf. Then-Senators Jim Webb and Jon Kyl flagged the deal in a letter to then-Commerce secretary Gary Locke, calling out ties between Huawei and the PLA, the Taliban and the Iranian Revolutionary Guard. Huawei ultimately accepted CFIUS direction to divest in 3Leaf.
And that’s just the tip of the iceberg.
