Huawei Technologies Focuses on Europe

DAVOS — Facing new efforts by a hostile Obama administration to shut it out of global markets, Chinese telecoms giant Huawei Technologies Co. is focusing on a friendlier Europe, where it says it spent $3.4 billion last year on procurement.

The money was spent on components, engineering services and logistical services, according to Ken Hu, Huawei's deputy chairman and rotating chief executive. Mr. Hu said Huawei now employs 7,700 people in Europe and the number would increase by about 1,000 each year over the next five years.

"The overall environment in Europe is friendly and the situation is stable," he told The Wall Street Journal on the sidelines of the World Economic Forum.

The Obama administration has been privately raising concerns with officials in South Korea about their plans to let Huawei develop the country's advanced wireless network, U.S. officials say. This follows a similar push with Australia, another close U.S. ally. The U.S. has branded Huawei a security threat, alleging it has close ties with the Chinese military, and has barred the company from its own telecoms infrastructure market.

"Why would they do this?" said Mr. Hu, referring to U.S. efforts to influence South Korean decisions.

"We feel quite regretful. It's a normal business activity and it shouldn't be affected by these groundless claims," he said.

Asked whether he thought the U.S. pressure would damage Huawei's prospects in South Korea, Mr. Hu said: "For us, it's hard to judge what's going on between governments."

Washington sees a risk that the company's equipment could be used for spying on communications among its partners, as well as compromise secure networks used by American military personnel, U.S. officials say.

However, revelations by former U.S. National Security Agency contractor Edward Snowden over the NSA's surveillance of electronic communications, and its close cooperation with U.S. telecoms companies, has created a growing outcry in Europe.

Huawei has endeared itself to governments around Europe by making the region its largest investment destination. Mr. Hu said the company now has two research and development centers in Europe spread over 14 locations. "It's an important part of our value chain," he said. Increasingly, he said, designs that drew on European art and culture were finding their way into consumer products made by Huawei, which is based in Shenzhen in southern China.

Source: Wall Street Journal by Andrew Browne