reuters

Explainer: Who is China’s Huawei Technologies and why is it controversial?

(Reuters) – The arrest in Canada of Meng Wanzhou, a top executive at China’s Huawei Technologies Co Ltd and daughter of the founder and CEO, jolted the global business community on Thursday and raised fears that a truce in the U.S.-China trade war could come to a swift end.

Meng’s arrest came at the behest of U.S. authorities and is connected to an investigation into alleged violations of U.S. trade sanctions, a person familiar with the matter told Reuters. China’s foreign ministry said neither the United States nor Canada have explained reasons for the arrest.

What is Huawei?

Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones, with revenue of about $92 billion last year. Unlike other big Chinese technology firms, it does much of its business overseas and is a market leader in many countries across Europe, Asia and Africa.

The company was founded in 1987 by former military officer Ren Zhengfei. It remains privately held and describes itself as employee-owned, though its ownership structure is unknown. It is based in the southern Chinese tech hub of Shenzhen and employs about 180,000 people.

How did the company become so successful?

Huawei was a pioneering supplier of telecom gear at a time when China was spending heavily to upgrade its networks, importing much of its equipment. Huawei began competing internationally in the 1990s and was known for drastically undercutting rivals on price.

Competitors branded Huawei a cut-rate vendor of copycat equipment, and companies including Cisco Systems and Motorola filed lawsuits over alleged trade secret theft.

But Huawei spent heavily on research and development and is now regarded as a global leader in key telecom network technologies and high-end smartphones. In contrast, its major Western rivals, Nokia and Ericsson, have struggled financially in recent years.

Huawei today continues to expand into new areas including chip development, artificial intelligence and cloud computing.

Why have some governments banned Huawei equipment?

U.S. intelligence agencies allege that Huawei is linked to China’s government and that its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

But suspicions persist. Concern now centers on the deployment of fifth-generation (5G) mobile networks, where Huawei is at the cutting edge. A new law in China requiring any domestic firm to assist the government when asked has also stoked concern…

Read Full Source: Reuters

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