Huawei: a justifiable ban or a missed opportunity?

Huawei: a justifiable ban or a missed opportunity?

ESSA Writers
April 11, 2014

Both the Coalition and Labor branches of government have categorically ruled out any Huawei participation in the Australian National Broadband Network. But is placing a blanket ban on one of the world’s largest and arguably most far reaching telecommunications giants from investing in the NBN justifiable? The Chinese company faces scepticism from the international community due to its dubious links to the Chinese government. Its lack of transparency with regards to its corporate governance standards serves as an impediment to its success in the Australian market. The most detrimental factor for Huawei is its reputation as an organisation unwilling to comply with international obligations of corporate governance and legality. Despite its global ubiquitousness, Huawei fails to uphold a respectable image.  The government has every right to remain unwilling to open the (Australian) door to Huawei investment.

Huawei has cemented its position in the international marketplace as a global technological giant. Despite this, Western governments have not been given access to information regarding Huawei’s leadership structure, market operations and internal controls. This fuels much of the doubt that foreign governments have towards the company. There is an incessant need for Huawei to cut through allegations of cyber espionage in order to effectively convince the Australian government of their intentions. The key question to be answered here is whether or not Huawei’s involvement with the NBN poses a real risk to Australia’s national security. The United States has previously stated that Huawei is ‘not to be trusted’. The cultural divide, where Huawei’s restrained methods of conducting business in Asia collide with Western values of transparency and openness makes a potential trade relationship all the more difficult to establish. Huawei’s attempt to preserve the traditional Chinese method of diplomacy is doing more harm than good, with the West viewing its actions as deceptive. But does the lack of evidence of Huawei’s misdemeanours make US sentiments merely propaganda? It is not to say that the lack of forthcoming evidence gives Australia the green light to allow Huawei into the country. The fact that Huawei chooses to remain secretive rather than open gives credence to fears that the telecom equipment it utilises may be a vehicle for the Communist party to infiltrate foreign IT systems.

The government is concerned about the potential for Huawei to operate under the influence of the Chinese Communist party. The main evidence of this is Ren Zhengfei’s extensive career in the People’s Liberation Army. It is likely that his relationships may negatively impact diplomatic, economic and trade relations should Huawei enter the Australian market. Chinese culture is one where those with established ties to the Communist government are subject to favouritism in the form of business loans, market support and tax incentives – fuelling the very real potential for the company to act in the interests of the Chinese government, rather than as an independent entity. It is important to note that there is no real evidence to suggest Huawei’s actions are in direct cooperation with the Communist government. Huawei’s connections are enough to cast a shadow of doubt over the legitimacy of its motives.

The Chinese technology giant has recently attempted to address the less favourable critiques of its business – in the form of developing corporate governance reforms, publishing of an annual report and commissioning lobbyists and consultants from elite firms. Huawei has taken a step towards the right direction, but it has a much more to do before it can win the trust of the Australian government. Huawei consider themselves to be a force to be reckoned with in terms of being an ‘innovator, sales force and a global brand.’ There is a clear lack of symmetry between the world’s perception of Huawei and their own perception of themselves. There is an inherent need to protect Australia’s national interest by denying Huawei investment if the government is not completely certain of the possibility of spying and network breaches. Huawei needs to take the lead and cut through the cloud of suspicion which continues to dampen their success of expanding in Australia.

China has argued that Huawei’s dominating presence in world information systems makes the Australian government’s denial of their entry into the domestic market contrary to the concept of free market economics. The argument that Huawei is a victim of the West’s protectionist sentiments is weak, due to the overriding negativity and doubt surrounding its inherent operations. Claims that Huawei operate under a shroud of secrecy are concerning from a national security point of view. Rather than being a target of the West’s protectionist policies, the ban on Huawei is precautionary to safeguarding Australia’s national interests.

The sensitivity and importance of the NBN infrastructure makes any decision to accept foreign investment one that needs to be thoroughly evaluated. The political angst surrounding the decision to involve Huawei in the NBN cannot be backed up by any evidence of Huawei acting in the interests of the Communist party. But without unquestionable proof of Huawei’s inner dealings and responsiveness to international legal obligations, its operations remain of high concern to foreign governments. Opening the Australian door to Huawei investment is not an option unless it can adequately address these security concerns in a transparent manner and rebuild their reputation as a trustworthy company.

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