Codename ‘F7’ in ZTE Internal Documents Refers to Huawei

Documents said rival 'F7' was skirting Iran sanctions
December 7, 2018 Updated: December 12, 2018

Details about the alleged crimes of Huawei Chief Financial Officer Meng Wanzhou, who was arrested in Canada on Dec. 1 at the request of U.S. authorities, remain scant.

Media reports have cited insider sources that say her case involves violations of U.S. sanctions on Iran.

Sources told Reuters that a U.S. probe is looking into the Chinese telecom firm’s use of HSBC Holdings to make illegal transactions involving Iran.

This was in fact hinted at back when the U.S. Commerce Department published internal documents of the Huawei competitor ZTE when it was slapped with an export ban in 2016 after U.S. authorities found that it had violated sanctions to provide electronic equipment to Iran.

The documents detailed how the firm skirted U.S. sanctions and how a rival company was doing the same thing.

Rival Company Codenamed ‘F7’

The internal legal document, dated August 2011, cited a rival company codenamed “F7” as an example of how to to skirt U.S. export controls, The New York Times reported.

The document said that “F7” hired attorneys specializing in U.S. export control laws for its main company as well as its subsidiaries. It recommended similar measures for ZTE.

The document stated that F7’s actions caught the attention of the U.S. legislature, and cited the following two events.

“In 2010, U.S. Representatives reported to Congress about F7’s on-going projects in embargoes countries and this affected its project acquisitions in the U.S.,” it read.

“In 2010, F7’s proposal to acquire U.S. 3leaf Company was opposed by the U.S. government, citing the impact to U.S. national security.”

The document’s description of “F7” squarely matches that of rival company Huawei (see here and here).

In fact, bloggers in China had already published the meaning of the “F7” code back in 2014.

Codenames Common

At high-level internal meetings, many major Chinese companies use codes instead of directly mentioning one another.

“F7” was code for Huawei because when said in Mandarin Chinese, “F7” sounds like “fu qi,” meaning “husband and wife.” The first letters of the phrase correspond to Huawei’s abbreviation, HW.

In Huawei’s internal documents, its chief competitor ZTE is referred to by executives as 26.

The numbers “er liu” said in Mandarin Chinese sound like the Chinese phrase for “second-rate”—a way of signaling contempt for the competitor. Furthermore, the 26th letter of the alphabet is Z, referring to ZTE.

Huawei considers itself a first-class company compared to ZTE.