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Illustration: Brian Wang

Turning around Huawei’s battered image: a tough job but someone ought to do it, crisis management experts say

  • Amid its many travails, the company’s public relations approach has suffered from inconsistency and poor coordination, observers point out
  • Many of the suggestions for the Chinese telecoms giant would require patience, humility and years of strategic nudging on multiple platforms
Huawei

After years of stellar growth and a rags-to-riches corporate history, Huawei Technologies is caught in the middle of a US-China trade war, accused of stealing trade secrets, facing espionage concerns, its chief financial officer detained, its global business threatened.

By its own admission, the crisis has cost the Chinese telecommunications giant US$30 billion.

Experts in crisis management – an industry that helped turn around Johnson & Johnson after the cyanide-laced Tylenol deaths and Volkswagen’s doctored-emissions scandal – say the Shenzhen-based company would be a particularly challenging assignment were they hired.

Success would crucially depend on Huawei’s willingness to follow their advice, spend and take the long view, hardly assured given sometimes erratic messaging and a revolving door of outside expertise, they add.

“Houston, we have a problem,” said Richard Levick, chief executive of Levick Strategic Communications. “If you’ve got US$30 billion a year at stake, I can’t imagine them not wanting to spend several millions of dollars a year on advisers and take their advice.”

Start by outlining realistic goals, experts say. Winning Washington’s approval to sell fifth-generation, or 5G, telecoms equipment? Forget it. Selling less sensitive hardware through US partners, chipping away at global suspicion and improving European commercial ties? Probably doable.

Since public opinion shapes politics in democracies, countering negative publicity is an early priority. Expand charity work, donate equipment and support tech education for underprivileged youth, thereby promoting Huawei’s commitment to people and not just profits.

Could Huawei be using Trojan circuits to help Beijing spy on US?

Given US suspicion of China, Huawei should use others to argue its corner, experts say. Recruit US retailers, suppliers, chip makers and industry associations whose interests align to frame the debate. Apply pressure in important congressional districts. Recruit rural carriers to underscore lost jobs and reduced service if they’re forced to use more expensive Nokia and Ericsson equipment.

A separate campaign should tap influential lawyers, academics and former government officials to counter Huawei’s vocal critics. Portray Huawei as an exemplar of “real” rural American values, a private company fighting government overreach, with an eye on US President Donald Trump’s base leading into the presidential campaign.

Hanging over Huawei is the widespread suspicion that it is not independent and facilitates Chinese espionage, which it has repeatedly denied. That is difficult to counter, experts said.

“To say there’s no connection is on its face laughable,” said Jude Blanchette, lead China consultant with the Crumpton Group and author of the book China’s New Red Guards. “But explaining to someone who hasn’t spent a lot of time in China the spectrum of possible interactions between a private company and the Communist Party is very difficult. It’s not exactly something you can explain in a tweet.”

Promotional staff pose at a launch event for Huawei’s Mate 20X, its first 5G-enabled smartphone, in Kuwait on Friday. Photo: Xinhua

Instead, distract and broaden the lens, damage-control experts say. Use tech industry “influencers” to highlight Washington’s and the tech industry’s dismal overall record on data security, citing Facebook’s record US$5 billion fine this month, then argue that Huawei is among the most secure.

Another step: sue the US government on constitutional grounds by arguing that laws targeting a single company are anti-American and leave US firms equally vulnerable.

Many of these efforts require patience, humility and years of strategic nudging across multiple platforms with reinforcing messages – and some may prove counterproductive, a lengthy fight extending beyond a single presidential or congressional cycle, experts said.

“Huawei’s not taking this seriously,” Levick said. “They don’t seem well armed for this battle.”

US is reviewing export requests to Huawei with ‘highest scrutiny’

But public relations only goes so far. Huawei also needs to make concessions, it was suggested, including better transparency and even letting Washington monitor its equipment and operations, as other foreign companies have done.

“Taking out ads of little girls with puppies is not enough,” said Eric Dezenhall, founder of Dezenhall Resources. “What we want to see is that they’re not going to engage in this practice.”

Even as it pursues a long-term US strategy, experts said, Huawei should exploit tensions between Washington and allies miffed by Trump’s tariffs and erratic policies to weaken US influence, thereby increasing the number of countries accepting Huawei smartphones and 5G equipment.

“It’s not realistic they’re going to be foreclosed from markets around the world,” said Chris Boyers, assistant vice-president of Global Public Policy at AT&T, at a recent Centre for Strategic and International Studies panel in Washington.

Meng Wanzhou, Huawei’s chief financial officer and the founder’s daughter, who has been detained in Vancouver, represents a special challenge.

“A billionaire’s daughter, that’s not something sympathetic,” said Dezenhall. “That’s a hard sell.”

Best to keep her of sight playing the victim while applying political and legal pressure, something Huawei and Beijing have done well, he added.

Experts also give Huawei credit for expanding foreign-media interviews with founder Ren Zhengfei and other senior officials, increasing its social media profile and appealing to European consumers with effective advertisements for its P30 smartphone.

But its approach has also suffered from inconsistency and poor coordination, they add.

Huawei CEO says company’s growth won’t be hurt much by US restrictions

Initially, the company adopted a contrite tone.

“Americans like humble,” said Bob Gold, president and chief executive of Bob Gold & Associates and managing partner of the investment consultancy Hemisphere Technologies. “Give us a story that shows you own it and are doing something about it.”

Within months, however, Huawei embraced a tougher line, declaring defiantly that Washington wouldn’t “crush” it, criticising Congress and the White House for overreach, noting that losing US$30 billion was “not a big thing” and assuming a “bring it on, we have nothing to hide” attitude.

Even as the company was arguing its independence from Beijing, in February it released a press statement through the Chinese embassy in Washington.

“Honey, I’m not having an affair, and just to prove it, I have a letter from my girlfriend here,” Levick said. “That’s what it looks like, doesn’t it.”

Huawei’s not taking this seriously. They don’t seem well armed for this battle
Richard Levick, chief executive of Levick Strategic Communications

Huawei has scrimped on lobbying, a near necessity in addressing American legal and reputational problems, spending just US$265,000 in 2018, according to OpenSecrets.org, compared with US$3.54 million for US network giant Cisco.

It has also run through several top global communication firms recently, reportedly cutting or downgrading Edelman, Racepoint and Apco, suggesting it is not interested in or listening seriously to outside advice. Former Huawei advisers declined to comment.

This fits with a broader pattern, said William Plummer, vice-president in Huawei’s Washington office from 2010 to 2018 and author of the book Huidu – Inside Huawei.

“As often as not, when substantive and informed experts suggested something that should be done, it filtered way up into some Mandarin star chamber and came back as something we didn’t recognise,” he said in an interview.

Some Huawei actions suggest that it is not prioritising the US market. A Wall Street Journal report on Sunday said the company planned to lay off hundreds of US workers.

A former Huawei executive who asked not to be identified said high US margins remained attractive. “They absolutely want to be in the US,” he said. “There’s a bit of adolescent behaviour here – if you don’t want us, we don’t care.”

A Huawei spokesman said the company worked with and often took advice from outside experts worldwide, but given their sometimes conflicting counsel, the company must consider its broader objectives. The turnover of US advisers has been limited, and where it has occurred reflects potential conflicts of interest, the official said, adding that agency relationships arranged from Shenzhen were a separate issue.

Crisis expertise might have helped Huawei during its recent attempted charm offensive when executives seemed unprepared for predictable questions from Western media. These included requests to substantiate long-standing Huawei claims that it is privately owned and queries about whether senior executives are Communist Party members.

“That they didn’t anticipate this type of question and have a ready answer is absurd,” Blanchette said. “There’s an inability to understand how their actions are perceived.”

Trump’s Huawei promise met with silence from China

The company has been forthcoming about its shareholder ownership, showing reporters its books, the spokesman said. Huawei continues efforts to be open and transparent, he said, declining to comment on the Wall Street Journal report about US job cuts, characterising it as speculative.

The former Huawei executive said the company had done a lot right, evidenced by its stellar growth, but could have been more modest.

“They were often in conquering mode, vanquish the competition, beat America. Fair enough, but now they have no friends,” he said, with even Chinese customers looking for more 5G suppliers to enhance global competition. “It’s better to be less greedy.”

Another problem, some said, is that Huawei is answering to two masters – Beijing, which has a hold over its existence, and markets and governments in the West, where much of its future lies.

A recurring problem for Huawei is widespread suspicion that it is a vehicle for Chinese espionage, which it has repeatedly denied. Photo: Reuters

“They’re betting that Xi Jinping will save them politically,” said Xiaomeng Lu, international manager with the Washington-based public policy firm Access Partnership, referring to China’s president. “In the worst case, they’re betting they’ll lose much of the international market” but receive Chinese subsidies, Lu said, adding that Ren’s bond with the government “is very, very strong”.

The former company executive said Huawei’s move from contrite to defiant coincided with Xi’s shift in tone. “The rest of the world is important to grow, but China is its survival,” he said. “If the Chinese government decided tomorrow to close it, they could. The US, even if it tried, never could.”

Others said Huawei’s crisis response reflected its roots in China’s very different ecosystem, where there is little pressure to be transparent or face tough questions.

“Huawei is indicative of China’s PR problems in general,” said Blanchette. “Their narrative is risk-averse, clumsy and wooden. It fails to fundamentally address the concerns surrounding the company and its connection to the Chinese state.”

Huawei warns against ‘politicisation’ of intellectual property

Huawei faces a key existential decision – whether it becomes a true multinational firm or remains a fundamentally Chinese company in management style and outlook, some crisis management experts say.

“The Chinese have been a major player in the world for over a millennium for a reason. They take brilliantly the long view. They have transformed the world,” Levick said. “This is an opportunity for Huawei to exhibit global leadership.”

But that requires breaking with the past, he added.

“Ren Zhengfei has the opportunity to show other Chinese companies how to slay the US dragon and cooperate and also compete,” Levick said. “They have the resources to do that. And they have the opportunity to do that. But right now, the way we see the chess pieces aligned, we don’t see them doing that.”

Added Gold: “Pain is the currency of progress. Huawei is in a whole world of hurt right now – and this is an opportunity to change.”

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