Now it’s all about TikTok. But Huawei led the way | Company Business News

House of Huawei. By Eva Dou. Portfolio; 448 pages; $34. Abacus; £25

It is one of the world’s most controversial companies, supplying much of the developing world with vital telecoms kit. American officials swear it is a spying tool for China’s Communist Party. It has been accused of all manner of infractions, including intellectual-property theft, receiving lavish state subsidies that allow it to undercut rivals on price and equipping the Chinese government with the most advanced tools for surveillance and digital oppression of its own citizens.

No other company has drawn the world’s two most powerful leaders, America’s and China’s presidents, into a direct geopolitical stand-off. And yet Huawei, a Chinese tech group, continues to thrive. In 2023 its revenues were around $100bn, nearly twice as much as those of Intel, an iconic Silicon Valley firm.

“House of Huawei” investigates these accomplishments and accusations. Eva Dou, a technology-policy reporter at the Washington Post, has parsed decades’ worth of Chinese documents to piece together how Ren Zhengfei, the company’s enigmatic founder, rose from poverty to lead what is probably China’s most powerful company. Huawei has gone from making basic telephone switches nearly 40 years ago to designing some of the world’s most advanced semiconductors today.

Ms Dou’s analysis is timely. The group was the first of now many Chinese companies that have raised national-security concerns in Washington. On January 19th TikTok, a popular short-video app, temporarily shut down its product in America, before making it available again after Donald Trump said he would give it more time to secure a deal with an American partner (to avoid being banned). Not long ago Huawei was dealt a more serious blow, when Mr Trump banned the sale and import of communications equipment from several Chinese firms.

For decades journalists and researchers have tried to prove that Huawei is state-owned and Mr Ren is a high-ranking military officer. Ms Dou explains how Mr Ren’s time in the army was actually largely spent doing low-level jobs, sometimes in a factory in a cave; he was not, as many in the West believed, a signals-intelligence officer. Huawei’s early shareholding records are convoluted. Early investors included people who worked at state-owned firms, and the group may have hired a plant from the country’s domestic spy agency to serve in senior roles.

Some of this strikes at the heart of the West’s misunderstanding about how China works. In the 1980s China’s economy was dominated by the state; doing business with purely private entrepreneurs would have made Huawei an oddity. Analysts often look for direct ownership by state or military companies as proof that a company might be swayed by the Communist Party. But no such direct link needs to exist. As Chinese companies grow and become more important, they inevitably become more entwined with the state and the party. The largest internet firms, such as Alibaba and Tencent, collaborate extensively with the government and sometimes invest with it in projects. (In early January America added Tencent to a list of companies it thinks work with the military.)

Huawei’s collaboration with the state may tarnish its reputation outside China, but it has been a valuable part of its business. In the mid-1990s the company sought connections with state telecom operators—and pledged to transfer its technology into state hands. Along with party officials, Mr Ren was an early voice calling for Chinese self-sufficiency in technology.

Today Huawei is at the forefront of helping the government accomplish that goal. In 2023 the group managed to produce its own high-powered chips for smartphones, three years after Mr Trump banned it from buying American ones. This allowed Huawei to relaunch its smartphone business. It has also been one of the main suppliers of surveillance technology used to watch over Uyghurs, China’s mainly Muslim ethnic group who have been detained en masse in the country’s north-west. It once designed a “Uyghur alarm” for a facial-recognition programme.

Ms Dou points out that Huawei first irked American snoops in the mid-1990s when it began expanding its fibre-optic cables overseas. At that point America’s National Security Agency “found itself shut out from many of the conversations it would have liked to hear”. This mistrust would eventually culminate in Mr Ren’s daughter, Meng Wanzhou, being arrested in Canada on American orders in 2018, sparking a bitter diplomatic dispute. Mr Trump called Huawei one of the biggest threats to national security.

Has America’s fear of Huawei—and of others such as TikTok—been overwrought? Revelations about the biggest Chinese hacking incident ever cast Huawei and TikTok in a slightly different light. Late last year it was revealed that Chinese spy agencies had gained access to large amounts of phone data from top American officials and could listen in on private conversations. American telcos have been ripping out and replacing Huawei gear for years. The breach should raise new questions about how democracies can protect themselves from China. Kicking Huawei out has been a political win for many in Washington. It has not, however, stopped the Communist Party from listening in.

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