Huawei Warns of 'Consequences' for U.S. Policy

Huawei, which suffers from allegations of opacity, is back preaching transparency to the rest of the world. The company has opened a new Global Cyber Security and Privacy Protection Transparency Center in its headquarters campus in Dongguan, Guangdong province.

What’s at stake? Huawei is back on offense. The company is aiming its message squarely at the United States, Huawei’s nemesis. It is warning that the President Biden’s latest executive order will reap unintended consequences for the US electronics industry. How much of Huawei’s rhetoric is bluff and how much the real stuff?

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Claiming “transparency” is easy. The hard part is backing up one’s self-proclaimed transparency with evidence.

This proposition applies in spades to Huawei.

China’s communication equipment behemoth has been charged with IP theft and accused of allegedly installing secret “back doors” for espionage purposes in its network equipment.

Not only is Huawei unfazed, it’s back on offense. 

This week, with politicians, corporations and the media buzzing over ransomware and cybersecurity attacks, Huawei opened a new Global Cyber Security and Privacy Protection Transparency Center on the company’s campus in Dongguan, Guangdong province.

This flourish provides Huawei fresh fodder to nudge the world about the importance of global collaboration to combat such attacks. Ken Hu, Huawei’s rotating chairman noted that the best defense is “sharing best practices and building our collective capabilities in governance, standards, technology, and verification.”

Despite these seemingly good intentions, Huawei continues to suffer from the world’s general distrust. Eager to alter the perception, Huawei insists that this bias is “based on feelings, not facts, speculations and baseless rumors.”

What does the Transparency Center offer?

Huawei’s current mission is to demonstrate to partners its commitment to transparency by opening a “New Transparency Center” in its headquarters. Presenting this new unit as a collaboration, evaluation and meeting center, Huawei says it will provide “a platform for security testing and verification” for its partners.

In a press briefing this week, John Suffolk, Huawei’s senior vice president for global cyber security and privacy, explained what clients can expect from Huawei’s Transparency Center. During security testing, for example, customers might find computer code that looks “a little suspicious, or you don’t understand,” Suffolk noted. In that case, Huawei’s engineers can intervene to analyze the problem. Or “if you want a detailed conversation about an end-to-end security architecture, we can also bring in our teams” who are right there on the headquarters.

Perhaps more important, Suffolk noted, “This is also the center where we [at Huawei] use independently to validate our own products before they go to market.”

Describing this analysis as an independent process installed at Huawei, Suffolk said that all products that go to market must be scrutinized in an internal cyber security lab. He said the lab operates independent of R&D. The center “reports directly to me. And if the product doesn't cut the mustard, or it doesn't conform to the baseline and all of the security requirements, it's blocked from going live.” Partner companies who come to the Transparency Center with products would receive the same high-quality testing and verification services.

Will this new Transparency Center, dubbed as the “mothership” of all six Transparency Centers Huawei has built worldwide, suffice to change the minds of all those Huawei skeptics?

Hard to say.

Remember that in 2019, Huawei launched a similar Transparency Center in Brussels. The world then was embroiled in 5G backdoor debates. Huawei’s announcement of the Center was dismissed by some software experts as “security theater.” Skeptics wondered if Huawei’s embrace of “transparency” would only foster a false sense of security about Huawei’s openness. The Transparency Center in Brussels didn’t exactly win over the doubters, especially as the then Trump administration discouraged European countries from embracing Huawei’s 5G telecommunication equipment.

Ringing alarm on the policy 'misstep'

Curiously, the opening of the Transparency Center at Huawei headquarters took place in the same week the U.S. Senate passed a bill designed to bolster America’s technological competition with China.

While its news hook was the opening of the Transparency Center, Huawei seized the opportunity to publicly ring alarms against its main accuser – the United States – which has kept Huawei on Washington’s trade blacklist.

Prior to joining Huawei in 2011, Suffolk, who spent more than seven years in the UK Government where he was Her Majesty’s Government CIO and CISO. He bluntly called “a policy misstep” the U.S. president’s recent executive orders blocking U.S. investment in certain Chinese companies on the grounds of national security.

Noting that “this is John Suffolk’s view,” he said, “I do personally worry – being an ex-government boy” that some of the policy initiatives taken by the United States today are “sowing the seeds for unintended consequences” in the global supply chain, the U.S. electronics industry and its future competitiveness.

Prohibiting American companies from investing into Chinese companies “will have an impact for American companies and Chinese companies,” he said.

China is already affected by its inability to spend money with American chip companies, Suffolk said. He said the size of the Chinese chip market is as big as “$400K billion a year.” He added, “So that's a big market. And if China is sitting there thinking we can't buy chips from Intel or Qualcomm, then we're going to have to make our own. And if they're making their own, that $400 billion market suddenly will move away from America.”

He added, “I say suddenly, [but] we are talking three to five years, because China will not sit on its hands. And you wouldn’t expect it to [do so].” He added that the U.S. policy of trying to curtail or slow Chinese technology is “going to backfire, because China really invests in technology.”

He admitted, however, that “It may not be as good as what we can buy from American. Now, let us be honest, American technology is brilliant. We want to buy it. We want to use Google. We want to use Intel. We want to use Qualcomm and all the other bits and pieces.”

But if China is not allowed access to the U.S. sphere, China will be shopping somewhere else. China will catch up quite quickly, he asserted. “So pick your timeframe, whether it's three years or five… there are going to be companies in Asia that could compete with American companies head on.” The result? “Not only have American companies lost a $400 billion market, but they are also going to have stiff competition,” warned Suffolk.

Suffolk’s theory isn’t particularly new. Many industry analysts were already forecasting along similar lines.

Is Suffolk bluffing? Not really. As recently documented by System Plus Consulting, a new supply-chain ecosystem – without U.S. companies – is already emerging for Huawei smartphones.

Hearing this warning directly and publicly from a Huawei executive carries weight. For most U.S. companies whose MO is to chase quarterly financial results, three to five years might seem an eternity. It’s one thing for politicians to strike poses that suggest big plans to compete against China. It’s entirely something else for Intel or Qualcomm to reveal an actual China plan three years out from today. The question we should be all asking is what that China plan looks like.