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5G networks

Huawei comes out swinging against critics

Chinese telecom equipment maker changes tack over US-led campaign

Huawei founder Ren Zhengfei speaking to journalists in Shenzhen in January.   © AP

HONG KONG -- Huawei Technologies has gone on the attack against its critics, abandoning its previous approach of letting Beijing lead the response to the U.S.-led campaign to bar its equipment from the telecommunications networks of allies around the world.

In a recent letter, Huawei warned customers who sponsor the Australian Strategic Policy Institute think tank that the research group's "one-sided" negative comments about Huawei "may also reflect on your company." It added, "We also know your brand is associated with ours."

Telstra was one of the companies contacted, a spokesman for the telecom operator confirmed. A generic copy of the letter posted on a Huawei website noted, "We feel ASPI has let both our companies down by their fixation on painting Huawei as the enemy without any evidence to back it up."

The more aggressive stance comes as Huawei faces the prospect of being shut out of a growing number of markets amid intensified U.S. lobbying. Australia, New Zealand and Japan have moved to restrict the use of Chinese equipment in local operators' next-generation 5G networks, while a number of European countries are considering following suit.

Despite recent signs that the U.K. and Germany may be resisting U.S. pressure, President Donald Trump this week indicated that the option of an outright ban on Huawei selling 5G equipment in the the country was still being considered as trade talks with Beijing continue. Currently U.S. government agencies are barred from using Huawei.

But Huawei is fighting back in the meantime. In a letter to the Czech National Cyber Security Center earlier this month, Huawei's top local executive threatened to take the agency to court if it did not quickly revoke its finding that the company's equipment could pose a security threat, claiming it had caused business losses.

Company officials are also taking a harder line in talking to international media. Founder Ren Zhengfei accused the U.S. of a "politically motivated act" in an interview with the British Broadcasting Corporation last week. This was "not acceptable," he said. "The U.S. likes to sanction others. Whenever there's an issue, they'll use such combative methods... America does not represent the world. This company will not change its trajectory forward."

Rotating chairman Eric Xu earlier accused Washington of "using a national machine against a small company, as small as a sesame seed." Speaking to other British media, he described recent U.S. actions as a "well-coordinated geopolitical campaign," potentially aimed at gaining leverage in trade negotiations or making it easier for U.S. agencies to intercept communications.

Huawei watchers say the company's change in tone is noticeable. By contrast, when U.S. prosecutors last month filed criminal charges against Huawei for the alleged theft of trade secrets and bank fraud, its measured official response was that the company was "disappointed to learn of the charges," which it denied.

Chinese officials and state media, however, repeatedly accused the U.S. and its allies of racism, hypocrisy, immorality, bullying and more against Huawei, which consistently stresses its private ownership and freedom from government control.

"The company is reacting to stiffening political headwinds, and its public relations campaign is getting more aggressive," said Max Zenglein, head of the economic research program at Germany's Mercator Institute for China Studies.

The new campaign may be directed internally. The company had chosen global PR consultancy Edelman in November to help with strategic communications but the agency last month decided not to proceed with the assignment. Edelman, which declined to comment on its reasons, counts Huawei rival Samsung Electronics among its major clients.

Huawei also employs lobbying companies globally. Transparency International estimates the company spends 2.8 million euros ($3.16 million) a year on lobbying in Brussels while such spending in Washington has fallen from $1.2 million in 2012 to just $165,000 last year, according to the Center for Responsive Politics.

"We have tended in the past to keep a low profile," a Huawei spokesman acknowledged. However, "Huawei is very concerned about misunderstandings which continue to linger despite our best efforts in recent years to be more open, transparent and accountable," he said. "In the past year there have also been false allegations, fake news and rumors spread about Huawei... We will continue to let the facts speak for themselves."

The company faces a dilemma in terms of its public communications strategy, experts in the field say.

"Huawei is under a very fierce public opinion offensive led by the U.S.," said Katherine Chen Yining, a public relations professor at National Chengchi University's College of Communication in Taipei. "It is very difficult for the Chinese company to only use ordinary PR methods or lobbying to solve the problem. For some countries where Huawei thinks it has some advantage or China has more influence, like in the Czech Republic, its language and actions could be tougher than in other markets."

In countries including Poland, Australia and New Zealand, Huawei has appealed directly to consumers, with public warnings that government hesitation about use of its equipment could drive up phone bills or delay new technology.

Mercator's Zenglein said, "As potentially higher costs and delays in the rollout of 5G networks are less abstract for consumers than security concerns, more pressure is heaped on political decision makers."

Andrew Little, the New Zealand cabinet member responsible for communications security, told local reporters that Huawei's approach would not be productive.

"If they are [trying to apply pressure], it's not helping," he said. "They are certainly being very active, some might say provocative."

Wu Shih-chia, a corporate communications scholar at the Chinese University of Hong Kong agreed that Huawei's harder line may not help the company.

"The fundamental issue that Huawei faces is a trust crisis," she said. "There is no simple PR strategy or a PR agency that could easily solve the company's problem."

Nikkei staff writers Cheng Ting-fang and Lauly Li in Taipei and Coco Liu in Hong Kong contributed to this report. Additional reporting by contributing writers Jens Kastner in Hamburg, Germany, and David Brooks in Wellington.

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