TORONTO—When Meng Wanzhou, the Huawei executive at the centre of a diplomatic row between China and Canada, visited the Toronto office of the Chinese telecom giant in 2016, the talk from local managers was that she didn’t like seeing so many “Chinese faces” in the office.
Meng, whose high-profile arrest in December 2018 started a downward spiral in relations between Beijing and Ottawa, was one of the founding directors of Huawei’s offices in Canada, and had a mission to establish a Canadian foothold for the controversial company founded by her father Ren Zhengfei, a former officer with the Chinese regime’s People’s Liberation Army.
Since Meng’s arrest, China has arrested Canadian citizens Michael Kovrig and Michael Spavor, sentenced two other Canadians, Robert Schellenberg and Fan Wei, to death on drug smuggling charges, and blocked Canadian agricultural imports.
The Formative Years
Documents registered with the federal government obtained by The Epoch Times show Meng as one of the founding directors of Huawei Technologies Canada when the company was first registered in 2008. Her name was removed as a director in 2013, but she continued making occasional trips to Canada.
At the time, the Shenzhen-based company was in the midst of its expansion outside China, capturing market share by significantly underbidding competitors and getting help from Chinese government subsidies and Chinese military “gift contracts” to lessen the pressure of turning a profit in new markets. By 2010, it was listed among the Global Fortune 500 corporations. Last year, its annual revenue passed $100 billion.
“Huawei took the international telecoms equipment market by storm by charging about an average of 40 percent less than the market rates. They were able to do that because they were a [Chinese Communist] Party-related company,” Mark Anderson, CEO of Strategic News Service, said in a past interview.
A partly redacted internal document from Global Affairs Canada dated Dec. 14, 2018, obtained by The Epoch Times under an Access to Information Act request, says that “with the demise of Nortel,” Huawei only faces competition from two companies in the West: Cisco and Ericsson.
The document adds that Huawei has over 850 employees across Canada, mainly in Ontario, and is the 25th-largest R&D investor in the country, maintaining partnerships with “nearly a dozen Canadian universities” as well as six regional and national telecom carriers.
Canadian Operations
When Huawei first started operations in Canada, the focus was on securing contracts with the major telecom carriers in the country. Meng oversaw negotiations with Wind Mobile (now Freedom Mobile) to provide vendor financing. Huawei assumed the risk of financing with the backing of a Chinese bank. She leveraged her high-level finance connections and accompanied a bank executive to Toronto to sign the vendor financing agreement during a visit to the office in 2008.Documents obtained by The Epoch Times show the company filed an amendment with Corporations Canada to update its list of activities to include “financing (deferred payment and lending)” in 2012.
Seeing a friendlier environment in a provincial government in Ontario, the company started moving R&D personnel to its offices in the province from the United States, where it was increasingly coming under scrutiny for its ties with Beijing. This week, Huawei revealed plans to move its entire research centre from the United States to Canada, as it faces sanctions in the United States.
Huawei launched an aggressive recruiting drive to attract Canadian technical talent, luring employees from Cisco, Alcatel-Lucent—another company that fell as Huawei ascended—and the bankrupt Nortel to join its ranks. In a five-year plan, it set out to recruit over 2,000 technical R&D personnel between 2015 and 2020. Its R&D operations in Ottawa were expanded to Toronto to take advantage of talent graduating from universities in Toronto.
Huawei managed to recruit all the top five 5G experts from Nortel, and they continued to work on the next evolution in wireless technology for Huawei. The federal government has so far not made a decision on whether to allow Huawei to be part of Canada’s 5G network or follow the advice of its allies to ban it.
The company was given a $6.5 million grant in 2010 from Dalton McGuinty’s Ontario Liberal government for investing in its R&D centre in Ottawa and hiring local employees, and another provincial grant of $16 million in support of its investment in the province by the government of Kathleen Wynne in 2016. The Ontario Research Fund also approved about $740,000 for a joint project between Huawei, Carleton University, Telus, and Bell Mobility in 2011.
The company’s operations in Canada (as in other countries) are divided into three business units: The carrier network business unit deals with selling products and solutions to carriers, with the bulk of the focus in Canada being on wireless solutions; the enterprise business unit provides data storage and analysis services; and the consumer business unit focuses on personal handset and device sales.
“Canadian operation of Huawei is very profitable compared to operations in other countries,” said Mary Liu, who worked as a high-ranking employee of the company in Toronto. (The Epoch Times is using aliases for former staff who wish to keep their identity private to avoid retaliation from Huawei and the Chinese regime.)
Liu added that to minimize Canadian taxes, the profit is offset with R&D costs and minimum transfer costs with other business units. According to Liu, Huawei successfully negotiated a favourable tax scheme base on a fixed annual profit rate of around 3 percent with the Canadian government, used as the base to pay business tax in Canada.
The true cost of the products is a well-hidden secret, with only a handful of trusted local employees being privy to that information, typically most of them expats transferred from China.
Anchoring in Canadian Society
As Huawei started to grow, concerns in Canada as well as south of the border about its ties to Beijing also grew. In 2012, a U.S. congressional committee said the company was a threat to U.S. security; the same year, Prime Minister Stephen Harper’s government banned it from bidding on building the government’s telecommunications network.The new push was for Huawei to become more deeply entrenched in Canadian society, especially as it had finally solidified deals with the major mobile providers in 2014, including Rogers, Bell, and Telus. That is why Meng reportedly wanted to see more “non-Chinese” faces in the company’s offices, especially for those who interact with outside clients. (Amid the controversy surrounding 5G, Rogers has since limited its use of Huawei in favour of Ericsson.)
An aggressive advertising campaign saw the company being promoted at major entertainment events and becoming a sponsor of Hockey Night in Canada, showing its logo to millions of TV viewers each week.
Alleged Discrimination
Former Huawei Canada staff The Epoch Times spoke to allege the company often discriminated based on race and age, with the latter being a legacy company culture imported from China.Liu said she was told directly by her superiors that Chinese employees—even Chinese-Canadians—should be offered a lower level of compensation.
She recalls that in one meeting, a high-ranking executive was dismayed at high employee costs, saying his expectation was that the Chinese employees should be getting paid less.
“For non-technical staff and those who deal with the public, they preferred to have non-Chinese employees,” she said. The intention, she explained, was to make the company appear to be well integrated in Canadian society.
She adds that Huawei “wanted to always keep a young workforce,” a policy that was imported by an executive who transferred from China around 2016. This policy, similar to the policy of hiring more non-Chinese locals, was reinforced by Meng, Liu said.
Under this policy, employees who are 35 and older and haven’t yet become managers are put in a pool maintained by headquarters in China, and if no divisions want them, they are let go, according to Liu.
Olivia Bai, another long-time former employee in Canada, says younger employees would be cheaper for the company and also more likely to work longer hours.
“You always heard about this and that employee getting laid off because of age. It wasn’t written down anywhere, but it was widely talked about,” Bai said.
Anna Yee, who worked as a full-time employee, says she was diagnosed with cancer and took medical leave, coming back to work after she was cured. However, she said she was eventually let go because of her age, after the new initiative to keep a young workforce was imported.
Liu said she heard directly from her superiors that the company wanted to get rid of Yee because of her age. At the time, Yee was in her early 50s.
Yee said up to her termination, she always had good reviews and was known as a hard worker.
“I loved working, and I always had good performance reviews,” she said.
After she was given her notice, Yee confronted her superiors by email, telling them what they had done amounted to age discrimination. She said the company denied any discrimination but boosted her severance package. She protested again, and the company increased its offer of severance again but didn’t reinstate her job. She is now considering legal options.
Communist Party Studies and ‘Wolf Culture’
According to former Huawei employees, expat staff transferred from China to Huawei Canada, which account for about 10 percent of the personnel in the Toronto headquarters, are required to participate in what is called Chinese Communist Party (CCP) study sessions every Saturday morning. Liu said she often heard complaints from some of the expats about having to attend these sessions.
In addition, all staff, including expats and locals, have to adhere to the company’s “wolf culture,” promoted by founder Ren, himself drawing from his background with the Chinese military. The purpose is to have all employees embrace the fearlessness and bloodthirsty nature of hungry wolves when pursuing the business interests of the company, being resilient while operating in harsh conditions as a team.
“They have the guidelines on Huawei’s internal website for all to see and follow. The idea is that you have to compete to succeed no matter what, even if it means competing with your fellow colleagues,” Liu said. “They even had us read articles on the ‘wolf culture’ and share our understandings, and then write up reports on the understandings and submit to the headquarters in China.”
Bai said the result of the promotion of wolf culture was that there was always a demoralizing atmosphere of competition in the company, creating tension between employees and managers and between fellow colleagues, and putting pressure on people working long hours so as not to fall behind.
“It’s normal for people to work an average of 10 hours a day, and then again after dinner, with no overtime pay,” Bai said. “You hear stories about this or that employee complaining about the long hours and no overtime pay, and then getting let go. Of course they don’t officially say that’s the reason, but that’s what everyone says.”
She adds that typically in companies, if someone is not performing to the expected level, they would first receive a warning and review meetings so they would have a chance to improve their performance. But in Huawei, they would make the working conditions more difficult for the employee they wanted to let go, such as increasing their workload and giving them poor performance ratings, so they would leave on their own.
“It really was an unhappy place to work,” Bai said.
Huawei currently has a number of job postings online, mostly for R&D positions. However, the former employees say workers they know who are still with the company tell them Huawei is currently doing rounds of layoffs, especially in non-technical and sales-related positions related to the major carriers.
“My [former] colleagues tell me they’re just waiting to get notified of being laid off,” Bai said.
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