Huawei: Hundred Billion Dollar Troll

The Financial Times reported earlier this week that Chinese telecom equipment manufacturing giant Huawei Technology has hired top-drawer Washington public relations group Burson Cohn & Wolfe to “help it make its case in the US following months of media and political scrutiny.”

One wonders where those spin doctors were on Thursday when Huawei summoned global press to its headquarters in Shenzhen to trumpet its annual financial results. The headline Huawei hoped for–and in some instances received–was that the company’s 2018 sales surged nearly 20% to a record $107 billion despite U.S. government efforts to cast doubt on the security of its products. Profits leapt 25% to $8.8 billion. Very impressive.

And yet most stories led with the in-your-face comments of Huawei’s rotating chairman Guo Ping: “The U.S. government has a loser’s attitude. They want to smear Huawei because they can’t compete with us.”


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    “Huawei Urges U.S. to Drop ‘Loser’s Attitude‘” blared the Reuters headline. “Huawei Executive Rips U.S. Government” echoed the New York Post.

    Sticking a thumb in the eye of Uncle Sam has become a staple of public appearances by Huawei executives. At the Mobile World Congress in Barcelona last month Guo trolled Washington by flashing a photo of former National Security Agency subcontractor Edward Snowden, who leaked documents revealing the NSA’s use of U.S.-made telecom equipment for a spy system known as PRISM.

    Another rotating chairman, Eric Xu, has lashed out against two U.S. congressmen as “ignorant” and “ill-informed” for charging Huawei with theft of U.S. technology. In a February interview with the BBC, Huawei founder Ren Zhengfei boasted “There’s no way the US can crush us. The world cannot leave us because we are more advanced.”

    The tough talk may be satisfying. Undoubtedly it plays well in Beijing. But it’s not winning friends for Huawei in the West.

    It shouldn’t require an expensive PR firm for Huawei to recognize that, beyond China, its core problem is one of trust. It needs to be seen as a reliable partner: responsible, respectful, mature.

    The way to earn that trust is not with grandiloquent boasts and bratty taunts. If Huawei wants to be taken seriously, it should stop blowing raspberries and instead offer constructive proposals to cooperate with Western–especially American–regulators to establish third-party panels that could review and verify its products are secure.

    More China news below.


     

    Clay Chandler

    @claychandler

    clay.chandler@fortune.com

    Economy and Trade

    Xi’s Euro tour. After signing Italy up to the Belt and Road Initiative last weekend, President Xi Jinping headed to France, where the two countries signed 15 business deals worth billions of dollars. Among them was a purchase order for 300 planes from Airbus, which was worth approximately $33 billion. That’s a blow to Boeing. China was one of the first countries to ground Boeing’s 737 Max aircraft after the fatal crash in Ethiopia this month and looks likely to exclude Boeing orders from any trade deal struck with the U.S. Fortune


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    Clocking up air miles. U.S. Treasury Secretary Steven Mnuchin was back in China this week with, fellow frequent flier, Trade Representative Robert Lighthizer to continue negotiations on trade. In a tweet, Mnuchin called the talks “constructive” and noted Vice Premier Liu He will be back in Washington next week to continue the conversation. Reportedly, China made proposals that address U.S. concerns of forced tech transfers for the first time. Previously Beijing refused to accept that was even an issue. CNBC

    Trade war spills into Brazil. Soy beans have been a focus of the Sino-U.S. Trade War, and the Amazon rain forest might get hit with collateral damage. After the U.S. restricted China’s access to American soy beans, China turned to Brazil to fill the gap. If Brazil increases production to meet demands, swathes of the Amazonian rainforest could be cut down to make way for soy fields, environmentalists warn. South China Morning Post

    Innovation and Tech

    One to watch. Two of America’s largest pension funds own shares in Chinese security camera manufacturer Hikvision, the world’s largest surveillance company. Hikvision’s cameras are installed across China but the company’s presence in Xinjiang has proved controversial. Since last year, roughly a million of Xinjiang’s minority Uyghur population have been detained in so-called “re-education camps,” where the mostly Muslim Uyghurs are taught to embrace more traditional Chinese culture. Hikvision provides CCTV coverage for the camps. Some funds are now being pressured to drop their stakes. Financial Times

    Seek and ye shan’t find. Google is reportedly conducting a covert assessment of Project Dragonfly, the code name for the company’s plan to develop a censored search engine for the Chinese market. Performance reviews are common place at Google but, unlike normal, the findings of Project Dragonfly’s assessment won’t be reviewed by regular staff. Instead management has established closed “review committees” to oversee the assessment. The Intercept

    Back on the market. Grindr, one of the most popular LGBTQ dating apps, is up for sale after the Committee on Foreign Investment in the United States (CFIUS) queried whether the app posed a security threat. That’s because Grindr was bought by Beijing Kunlun Technology three years ago. CFIUS didn’t specify what the security concerns are, but it’s likely CFIUS worries the Chinese company could use the app to gather sensitive data on U.S. citizens. The Verge

    In Case You Missed It

    More Than a Third of China Is Now Invested in One Giant Mutual Fund WSJ

    Alibaba accuses Meituan CEO of libel for questioning founder’s integrity TechNode

    Meng Hongwei: China to prosecute former Interpol chief BBC

    Airbnb Wants the Key to China’s Millennial Empire WSJ

    Has China’s answer to Davos lost its shine with high-profile absences and a TV blackout? SCMP

    Politics and Policy

    On the mend. New Zealand Prime Minister Jacinda Ardern is flying to China tomorrow to meet President Xi Jinping, a month after Beijing postponed an original meeting in February. Observers suspect China was punishing the Kiwi nation for blocking Huawei’s bid on a 5G network last November. Now, just two weeks after the deadly shooting at two mosques in Christchurch, Ardern is facing pressure to confront Beijing on its treatment of Muslim Uyghur group’s in Xinjiang province. Bloomberg

    Canola go so far. China has banned imports of canola seeds from two of Canada’s largest suppliers, threatening the $2 billion trade. Beijing halted imports from Canada’s largest exporter earlier this month and expanded the blockade to the second largest exporter this week. Foreign Ministry spokesperson Geng Shuang said the ban is “scientific” but added Canada could help by taking “practical measures to correct the mistakes it made earlier.” Likely an oblique reference to the arrest of Huawei CFO Meng Wanzhou in Vancouver last year. Reuters


     

     

    This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.

    Read more: fortune.com

     


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