Huawei fights back against claim in research paper that it is government funded and controlled
- Huawei says there is no state-owned funds in the company
- Comments also come after The Times reported that the CIA had told spy chiefs that Huawei has taken money from the PLA and other state entities
Huawei Technologies, the world’s largest telecoms equipment vendor, defended its independence on Thursday after a recent research paper questioned the company’s claim to be employee-owned, saying that the identity of the actual owners is unknown and may potentially include the Chinese government.
Huawei was responding to a paper jointly written by Donald Clarke of George Washington University and Christopher Balding of Fulbright University Vietnam, which said Huawei is wholly owned by a holding company, of which 99 per cent is held by an entity called a “trade union committee”. The authors say the trade union committee — if it is run like similar organisations in China — could mean that the telecoms equipment giant is owned and controlled by the government.
“The trade union committee, which manages the union in Huawei, organises some amateur, after-work events including physical activity, to ensure employees have a healthy work-life balance,” said Jiang Xisheng, chief secretary of Huawei’s Board of Directors, in a press conference on Thursday. “It is not involved in any decisions connected to Huawei’s business and operations.”
Jiang further explained that the trade union committee was established to meet legal requirements and oversees activities such as badminton and hiking.
Jiang’s comments also come after UK newspaper The Times reported that the CIA had told spy chiefs that Huawei has taken money from the People’s Liberation Army, China’s National Security Commission and a third branch of the nation’s state intelligence network, citing an anonymous UK source.
The Times report also comes at a time when many countries are deciding whether to include Huawei as an equipment provider for the roll out of 5G networks, after the US raised security concerns.
“Most of the claims made by the US government [about Huawei] are not true,” said Jiang. “There is certainly no state-owned capital in Huawei.”
Huawei is currently at the forefront of next generation 5G network technology, with the most number of standard essential patents, according to German intellectual property analytics firm IPlytics. However, Huawei’s carrier business has come under pressure in recent years as the US drummed up its campaign against the company.
The research paper argues that as Huawei’s trade union committee reports up into more senior trade union organisations, theoretically all the way up to the All-China Federation of Trade Unions, which is controlled by the Communist Party of China, then the telecoms equipment giant should be deemed as being owned and controlled by the government.
Huawei said it does make certain payments to a Shenzhen union association, as required, but does not discuss or disclose any of its business operations with the more senior union entity.
Furthermore, due to limitations on the way companies can be registered in China, the trade union ‘model’ was the only way privately-owned Huawei could register its hundreds of thousands of shareholders – a method that has also been adopted by other major employee-owned enterprises in China before going public, said Jiang.
Huawei’s Representatives' Commission, which currently has 115 members elected by all shareholders through a “one share one vote” mechanism, is the ultimate decision-making body of the company, added Jiang, who insisted the company is not owned, controlled or affiliated with the government, or any other third party corporation.
Huawei employees own the company through an Employee Stock Ownership Program (ESOP) that has been in place since the company’s early days. As of 2018, there were 96,768 employee shareholders, said Jiang, and no-one can own a share of the company without working there.
Huawei’s founder and chief executive Ren Zhengfei owns a 1.14 per cent stake in the company, according to its website.
Ren has certain veto power in the company in areas such as capital increases, major governance regulations, revision of governance documents, nomination of candidates for directors and supervisors of the company, all of which are stipulated in the company’s charter, Jiang said.
