China-based telecommunications giant Huawei was established in 1987, but the company's inner workings have remained a mystery to most outsiders. While many in Western government and security agencies attribute that mystery to a lack of transparency on Huawei's part and to the typical close ties between large Chinese companies and China's government, Huawei maintains that it's due more to the fact that the company is young and is still learning how to be a world IT and telecom power.
CRN talked to William Plummer, vice president of external affairs for Huawei Technologies and the most public face of the company, about Huawei's structure, the difficulties it has in breaking into the U.S. market, and the need for it to be a better communicator.
CRN: What is the tie-in between Huawei's mobile device, infrastructure and enterprise businesses?
Plummer: They are definitely separate companies. A couple of years ago, they were reorganized as separate business.
Infrastructure has a different rhythm from the dynamic business of our enterprise business and the volume business of our devices business. So we set the three horses to run free. They are run as independent businesses.
CRN: How important is the U.S. market to Huawei?
Plummer: We look at it in a different way. Huawei is a $35 billion company doing business in over 150 markets. We have nationwide carriers as customers in nearly every OECD [Organisation for Economic Co-operation and Development] country. This is a company that has been proven and tested, and has brought innovation in these countries.
There's a reason why European telecom customers pay one-third the cost of U.S. customers. The CTIA [Wireless Association] in May reported that wireless providers in the U.S. invest about $94 per subscriber vs. $16 per subscriber worldwide. I don't think this is good thinking. Having Huawei compete in the U.S. market is in the best interest of the U.S.
CRN: What about resistance to Huawei from the U.K. and Australian governments?
Plummer: [In response to the June Intelligence and Security Committee report], the U.K. government specifically said equipment using Huawei operated at a high state of integrity.
In Australia, major commercial customers work with Huawei. On the government side, a political decision was taken. We'll see what happens going forward.
CRN: How about in the U.S.?
Plummer: Huawei has a number of tier-three and tier-four customers in the U.S. We are challenged in tiers one and two in the U.S. for political reasons.
Three years ago, the political protectionist actions against Huawei were draconian and remarkably transparent. But in the last three years, those efforts have been weak. The U.S. Congress [Permanent Select Committee on Intelligence] report against Huawei was 52 pages of vapor.
Those in the [U.S.] government looking for challenges realize that the telecom industry is interested in transactions with Huawei. Huawei has 28 R&D centers, including seven in the U.S. We do our coding on a worldwide basis. And security threats are universal.
In March, we saw the government and Congress fund operations through October, and saw one paragraph at the end forbidding investment in equipment from companies invested in by foreign governments. A response by the BSA, the SIA, the SIIA, the U.S. Chamber of Commerce and many others said that everyone in the industry would be caught up in the same net, and that this was terribly bad policy in that it invites reciprocity by other governments. One day after that letter, the president came out in agreement.
We're heading in a direction where rational thought is breaking out all over. We're heading in a direction where Huawei can meet the needs of all customers.
CRN: Can Huawei Enterprise do well in the U.S. in the face of pushback against Huawei's entry into the U.S. telecom market? How?
Plummer: Huawei's mobile device business is doing very well in the U.S., and the enterprise business is new in the U.S. On the infrastructure side, we're servicing the business we have at present. Much like other companies in our business, we're expecting spending of several billions of dollars to upgrade carrier technology in three- to five-year cycles. And we're currently in a trough now [in that cycle].
CRN: Why doesn't Huawei CEO Ren Zhengfei do more to personally answer questions about Huawei?
Plummer: We are all products of our environments. He has his own personal history that led him to not speak with the media or with governments. His [May 2013] press interview in New Zealand was the first time he has ever met with the media.
Our annual audited report is done by KPMG. We're not a publicly traded company. But we're moving to be come open like a public company. We're becoming more and more open. But we're a new company. We have 150,000 people, 70,000 of whom are in R&D. The average age of our employees is 28. We have a bunch of really young, smart people.
Our focus has been less on how we can communicate better. But, frankly, if we had been more open 10 years ago, a lot of the issues we are addressing today we wouldn't have today. We acknowledge that. We need to be better communicators.
If we had been less focused on innovation 10 years ago and more focused on our brand, we wouldn't have these issues today. But then again, if we did that, we might not have the innovation we have today.
CRN: A lot has been written about the adversaries who have pushed back against Huawei's entry into the U.S. and other telecom markets. In the U.S., does Huawei have any friends? How about in the U.S. government?
Plummer: Huawei is broadly recognized as a global leader in the manufacturing services industry. We have unique supply chains, and have done a lot of innovative things.
About one-third of the input into our technology comes from U.S. suppliers, one-third from Europe and one-third from Asia. Our Asian suppliers provide things like batteries, etc. The U.S. provides us with silicon.
About a year ago, we announced in California that we had signed a three-year, $6 billion deal with Qualcomm, Broadcom and Avago.
On the government side, it's good to see the White House say we need universal answers to universal issues.
KRISTIN BENT contributed to this story.
PUBLISHED AUG. 19, 2013