Huawei in Europe: Will Mao Zedong’s Strategy Win the Market?

Huawei in Europe: Will Mao Zedong’s Strategy Win the Market?
The local offices of Chinese telecoms firm Huawei in Warsaw, Poland, on Jan. 11, 2019 (Reuters/Kacper Pempel)
Nicole Hao

Huawei is facing roadblock after roadblock in the European market.

Germany is considering stricter security requirements in an effort to exclude Huawei from building the country’s next-generation 5G networks, while French telecommunications company Orange announced it would not hire Huawei system for 5G in France. The UK’s BT Group also banned Huawei from 5G and said it would remove the company’s equipment from its existing 3G and 4G operations. Meanwhile, Czech intelligence agencies warned of the security threats from Huawei, and Poland is considering a ban, too, after a Huawei employee was arrested and charged for espionage.

This wasn’t something Huawei foresaw. The company’s founder and CEO, Ren Zhengfei, had hoped to use former Chinese Communist Party leader Mao Zedong’s strategy of “seizing the countryside and then using rural bases to encircle and capture cities.”

As explained in a 2014 Chinese magazine article detailing Ren’s life, the executive wanted Huawei to conquer the less developed markets first, then use that experience to penetrate the more competitive and developed markets.

The report noted that in 1997, Huawei made its first foray into the overseas market with Russia. Russia’s tech development was behind that of most of Europe and the United States, and the former communist country had maintained a good relationship with China.

After Russia, Huawei targeted African countries, Eastern European countries, the Middle East, Southeast Asia, and South American countries. The company’s ultimate goal was to win business in Western Europe and the United States.

Forcing Its Way Into Markets

The company has used a slew of unorthodox tactics to win business in markets around the world.

On Oct. 14, 2014, Michael Makuei Lueth, minister of information for South Sudan, sent a formal letter to Barnaba Marial Benjamin, the country’s minister of foreign affairs and international cooperation, alleging that Huawei hacked his official email account and sent a forged document to Li Ruogu, president of the Export-Import Bank of China, in order to help the company win a contract.

Given the forgery, “I suspect that Huawei has been hacking many government officials e-mail and falsifying and forging documents on behalf of the senior government officials,” Lueth wrote in the letter.

In 2016, an anonymous Huawei sales manager in Nigeria shared his experiences on social media.

He talked about an incident in 2012, when the equipment room of an unnamed European telecom network operator caught fire and Ericsson equipment valued at roughly $20 million was burned to ashes. He and his colleagues saw a chance to enter the market.

A mobile phone mast with 5G technology at the 5G Mobility Lab of telecommunications company Vodafone in Aldenhoven, Germany, on Nov. 27, 2018. (REUTERS/Thilo Schmuelgen)
A mobile phone mast with 5G technology at the 5G Mobility Lab of telecommunications company Vodafone in Aldenhoven, Germany, on Nov. 27, 2018. (REUTERS/Thilo Schmuelgen)
“We decided to grab the chance and donate an equivalent system to them free of charge,” the Huawei sales manager wrote. “Strategically, it will help us break through the market [if the operator agreed].” The manager did not disclose the European country where this occurred.

Lobbying, Hiring

Huawei also knew how to recruit the right people to the company.

In 2011, just after European Union Ambassador to China Serge Abou retired from his position, Huawei approached Abou to be its senior adviser. Abou joined Huawei in 2013 after the two years he was required to wait before taking on the consulting job—but the potential conflict of interest raised eyebrows.

In an October 2013 report, the South China Morning Post (SCMP) quoted Olivier Hoedeman of Corporate Europe Observatory, a Brussels-based nonprofit that researches the effects of corporate lobbying, as saying: “Even though Abou cannot directly lobby [for Huawei], he can help [the company] to gain access by his insider knowledge. There is a big risk of conflict of interest, because he knows which doors to knock on and how to open them.”

Aside from Abou, Huawei also hired seven lobbyists “that are accredited to the European Parliament, and has hired five consultancy firms to lobby for them with the European Union,” Hoedeman told SCMP.

According to the EU Transparency Register, a voluntary registry of lobbyists, Huawei spent about 3 million euros ($3.42 million) each year lobbying the EU.

In October 2011, John Suffolk, former chief information officer for the UK government, joined Huawei as its global head of cybersecurity after getting approval—as per UK regulations—from then-Prime Minister David Cameron.

Suffolk had worked in the UK government for seven years. He helped Huawei developed its cybersecurity assurance system.

Today, Huawei has 18 research and development centers in Europe, led by the Huawei European Research Institute based in Belgium. The company has academic partnerships with more than 100 universities in Europe, investing 75 million euros ($85.29 million) in them, according to the company’s website. But they have recently been called into question amid growing scrutiny of the Chinese tech giant.

In total, Huawei has signed more than 210 cooperation agreements with European companies.

Suspected Interference in Arts Scene

Huawei recently invested in the French arts and culture scene—with curious timing.

On July 9, 2018, Paris Opera, France’s premier opera and ballet company, announced that Huawei would invest 900,000 euros ($1.025 million) over three years to set up a global “digital academy” for the performing arts company, including online courses, archival videos, and more, according to a report by radio station Europe 1.

Chinese state media also praised the partnership in a media report, noting that the effort is supported by China’s Ministry of Culture.

Around the same time, the New York-based company Shen Yun Performing Arts was in negotiations with Paris Opera to rent a venue, the Palais Garnier, for several performances, as part of its 2019 world tour.

Shen Yun’s presenters in France told The Epoch Times that the discussion about booking the venue suddenly came to a standstill after Paris Opera made the deal with Huawei.

After talks with Paris Opera stalled, Shen Yun presenters ultimately brought the performance to another venue in Paris, the Palais des Congrès. The company just completed a successful run at the theater in mid-January and will perform there again in May.

According to Shen Yun’s website, the company’s mission is to revive 5,000 years of Chinese civilization. Since its founding in 2006, the Beijing government has consistently tried to stymie the company’s presence in the West, apparently due to the company’s portrayal of topics considered “sensitive” by the regime, such as the Chinese Communist Party’s persecution of the spiritual meditation practice Falun Gong.

The Epoch Times, as well as European media outlets, have documented that Chinese consulates and their operatives around the world have for years pressured theaters not to lease their spaces to Shen Yun, or have sought to coerce Western government officials to not attend the performances or voice public support for the company.

Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.
Related Topics