Chinese telecoms giant Huawei has been barred from contracts worth billions and seen the public perception of its brand crash across four countries across three continents in a few short months.
China’s ambassador to the UK said backbench MPs who continue to protest the firm’s involvement in building Britain’s 5G infrastructure are conducting “a witch-hunt”.
“I think what they are doing is a kind of a witch-hunt,” Liu Xiaoming said last week. “Huawei is a private-owned company, nothing to do with the Chinese government . . . the only problem they have is they are a Chinese company.”
Last month Prime Minister Boris Johnson ruled that “high-risk vendors” such as Huawei would only be allowed into non-sensitive parts of the UK’s 5G network, with their total involvement in the overall project capped at 35 per cent.
5G’s $2.7trn infrastructure play
The global cost of 5G infrastructure investment and licenses will run to $2.7trn by the end of 2020, estimates Greensill, a UK company that provides working capital to the industry.
Two days after the UK government’s announcement British legacy telecom BT said stripping out banned Huawei equipment its broadband network will cost its group £500m over the next five years. Vodafone added that ripping out Huawei kit from its network would cost it £169m, at its third-quarter results earlier this month.
The move went against warnings from America’s Trump administration, that without a total ban on Huawei, security sharing between the US and UK is at risk.
These countries are part of the long-standing Five Eyes intelligence alliance that also includes Australia, New Zealand, and Canada. These allies are granted access to classified US intelligence.
Chinese origins
America, Australia and Canada have already banned the Chinese telco from taking any part in the building of their superfast 5G networks, which will power everything from self-driving cars, smart homes, faster banking apps and other financial services, and more.
Public perception of Huawei, which also sells smartphones and PCs as well as IT infrastructure, has nosedived.
Just one in ten Brits, or 10 per cent, say they trust Huawei, according to a YouGov poll early last month.
This distrust also extends over a range of Chinese IT firms. When members of the UK public who were unaware of the origins of Chinese firms such as computer firm Lenovo and telco Oppo, were told of their home headquarters suspicion increased.
‘Substandard’ China
Thirty-two per cent of people said they trusted Lenovo, but this fell to 20 per cent when their provenance was made clear. Similarly, trust in Oppo fell from 13 per cent to 9 per cent, while Huawei slipped from 12 per cent to 10 per cent.
The ramping up of tensions between the US and China over the last three years has played into “the UK public’s broader distrust of China”, said YouGov.
Sixty-three per cent of Britons said they consider China “untrustworthy”, with only Russia ranking higher at 73 per cent. Also, 61 per cent of the UK public “worry” about the People’s Republic’s environmental record, while 35 per cent believe its products are “substandard”.
These public perceptions are echoed in countries that have adopted outright bans on using Huawei in their next-generation networks.
In the US, almost three-quarters of Americans, or 74 per cent, agree that Huawei should be barred for working on its 5G network, according to a poll by lobby group 5G Action Now at the end of January.
Tit for tat
Sixty-nine per cent of Canadians say Canada should not allow Huawei to be involved in the country’s 5G networks, said a survey by data group the Angus Reid Institute in December.
However, tensions between Canada and China have been tense for some time. Canadian authorities arrested Huawei chief financial officer Meng Wanzhou over a year ago, at US request, on fraud charges related to violating sanctions against Iran.
Since then, China has detained two Canadian citizens in what is widely seen as retaliation for Meng’s arrest.
Half of all Australians support its government’s ban on any Huawei involvement in its superfast network, reported a survey by think tank the Lowy Institute last July.
‘Foreign interference’
Canberra pushed through its ban in August 2018, saying that using Huawei technology would expose its networks to “foreign interference.”
Australia made its move despite growing economic ties with China, which saw the Asian state become its largest trading partner in 2007.
However, countries that ban Huawei from their next-generation networks are in a pickle, because the Chinese group’s scale and technology is far greater than its nearest rivals Sweden’s Ericsson and Finland’s Nokia.
This week, US Attorney-general William Barr even suggested American private equity groups consider a takeover of one or both of these firms to compete with Huawei.
“Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies,” Barr said in a speech at the Centre for Strategic and International Studies, a Washington think tank.
Barr added: “Putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor and eliminate concerns over its staying power. We and our closest allies certainly need to be actively considering this approach.
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