After espionage chiefs from the ‘Five Eyes’ agreed last July that they would try to contain the global growth of Chinese telecom Huawei (over fears that it was spying for China), a new report from the Huawei Cybersecurity Evaluation Centre (HCSEC) says that the company is still not fixing previously identified security problems.
Summary – Bans, Detention, and Trump’s Trade War Efforts
Last summer saw US President Trump put China in his sights for a trade war, and with a climate of fear about possible Russian interference in US political affairs, you could be forgiven for thinking that it would have been relatively easy for Mr Trump to point the finger at China too, while implicating US tech giant Apple’s biggest competitor at the same time. In fact, after the ‘Five-Eyes’ (Australia, Canada, New Zealand, the U.K. and the U.S.) announced that Huawei could be spying for the Chinese state, the US, Australia and New Zealand banned Huawei Technologies Ltd from being a supplier for fifth-generation networks, and Japan banned Huawei from official contracts from December 2018.
Also, pressure was put on Deutsche Telekom, the majority owner of T-Mobile US, to stop using Huawei equipment, and Meng Wanzhou, the chief financial officer of Huawei, was detained in Vancouver at the request of U.S. authorities for allegedly violating US sanctions on Iran. China’s state-run media and some other commentators suggested (perhaps unsurprisingly) that Meng’s detention appeared to be politically or economically motivated.
Huawei has been left with no option but to sue the US government in a Texas court, and to claim the ban on the use of Huawei equipment by any US federal agency violates parts of the US Constitution.
Last November, in the face of mounting concerns and criticism, Huawei’s board of directors resolved to carry out a companywide transformation programme to the with a starting investment of US $2Bn, to enhance software engineering capabilities. The company also said it would work with UK operators and the NCSC to make sure that the implementation met required standards along the way.
New Report Says Old Problems Not Fixed
The new report by HCSEC claims that Huawei isn’t making any real, material progress on the problems identified in the 2018 report. HCSECs Oversight Board is still concerned about Huawei’s approach to software development, and the risk that it may pose to UK operators. The Board is also concerned about the security aspects of the Huawei equipment currently deployed in the UK.
Huawei is world’s top producer of telecoms equipment and No.3 maker of smartphones. However, BT for example, has been using Huawei systems as part of its network, but after security concerns were expressed last year, it has been removing Huawei systems from the core of the mobile network EE, which it purchased in 2016.
Huawei has met recent criticism from the US by saying that it is simply the result of the US displaying a “loser attitude” because it can’t compete with Huawei’s success.
Spying Would Be Suicide
The chief legal officer of Huawei, Song Liuping, has pointed out that spying would be commercial “suicide” anyway for Huawei because more than 48% of its business comes from overseas markets.
It would be true to say that Huawei’s consumer products (i.e. phones) have proven to be very popular despite the accusations made against the company. Huawei has predicted that it could become the world’s biggest-selling smartphone vendor this year and that all three business groups – consumer, carrier and enterprise, are expected to post double-digit growth in 2019.
What Does This Mean For Your Business?
Many commentators acknowledge that there may be political and economic motivations behind some of the measures being taken against Huawei. The point that the ‘Five-Eyes’ have been trying to highlight is that possibly, Huawei’s products and network software could have backdoors built-in to them which could, in theory, allow covert surveillance or control, or destruction of phone networks (which are accessible via the internet). The fear is that those acting for the Chinese state could gain access to the data stored/routed through Huawei devices, telecoms equipment and software, and could even, perhaps, monitor the conversations on mobile phones. No evidence of this has been made public to date.
One thing that is hard to deny, however, is the popularity of Huawei’s consumer products. The company has now become the world’s biggest producer of telecoms equipment and has overtaken US giant Apple in terms of the number of handsets that it ships worldwide. UK stores are still stocking and selling its handsets, and the warnings of various governments look unlikely, for the time being, to make any major dent in that side of its business, although more outright bans from more countries (for a company that ships nearly half of its products overseas) could soon begin to hurt.