Special Report: Huawei - Connected & Contested

[Music] Huawei it's the Chinese telecom company that pushed its way onto the global stage becoming the world's largest provider of networking gear the number two smartphone maker and one of the biggest proponents of 5g technology but as China and the u.s. face off in an increasingly ugly trade war Huawei finds itself at the center of the storm Huawei is something that's very dangerous you look at what they've done from a security standpoint from a military standpoint it's very dangerous highlighting founder and CEO Ron John phase connections to the Communist Party and former life as an engineer for the People's Liberation Army the US has accused Huawei of being a powerful tool in China's spying arsenal who you may well hordley if we were behind Trump wouldn't need to make so many efforts to attack us he attacks us because we are now more advanced than them despite denials from Ren and the Chinese government the u.s. along with Japan Australia and Taiwan have banned Huawei equipment and Trump has blacklisted the company cutting it off from the US software and semiconductors it needs to make its products tech giant's Google Intel Corp Cal Kong Xilinx and Broadcom have told their employees they will not supply Huawei until further notice did you mean the u.s. keeps abusing its national power to willfully smear and crack down on other country's enterprises including Chinese enterprises that isn't all Rhenish fighting in December 2018 his daughter and Huawei CFO mum when Joe was detained in Vancouver at the request of the u.s. a grand jury in New York has returning indictment alleging 13 additional crimes committed by Huawei its CFO its affiliate in Iran and one of its subsidiaries Hmong remains in Canada under house arrest until the courts determine her fate connected and contested Huawei says it simply wants to connect the world in the next technological revolution but with the u.s. determined to check what it claims is a major cyber security risk the company's future has been thrown into doubt quoi weighs vast campus here in southern China is emblematic of the company's towering ambitions CEO and founder and young Fei acknowledges that that ambition and the company's future is now in doubt but he also remains defiant in the face of mounting US pressure President Trump has suggested that Huawei could be a factor in any trade deal between the US and China how likely is that do you think from your perspective the US has never bought products from us so how can they negotiate with us even if the US wants to buy our products in the future I may not sell to them there's no need for a negotiation I will ignore Trump then with whom can he negotiate if he calls me I may not answer but he doesn't even have my number I see his tweets and I think it's laughable because they're self contradictory a president Trump has described Huawei as a dangerous company he said and I'm quoting from a security standpoint and from a military standpoint this is a dangerous company how do you respond to that 5g is not the atomic bomb 5g is just a tool to transmit information the content transmitted has nothing to do with the transmission tool it's just like a microphone you can't say a microphone is a dangerous tool because it can transmit voices but the content of the voice the person who speaks into the microphone could be dangerous how come the tool is considered dangerous each operation you've said in the past that you think President Trump is a great president do you still think he's a great president he would tell him hold sig always valid Trump only Trump is a great president because he tells the whole world that Huawei is a great company and not to sell components to us which is a promotion for us Xinhua woman Yahoo would she know we can't even keep up with supplies as orders have increased I think he's a great president as he promotes how great Huawei is the decision to blacklist quoi way by the US as being framed by some US lawmakers as essentially a death sentence for the company do you see this as a question of life and death for quoi we tinker see Jaffe T Co salami Huawei now is like a plane with so many holes after being attacked but we still don't want to die we want to fly home so that's where we are just yeah don't make Obama follow suit you mean Danny mayhaw the US has put us on the banned list so we might have some difficulties but we want to fix the holes and adjust the route while we are flying Hugh Bowman oh don't you be encode oh yeah we will definitely be able to survive and be able to lead in areas like 5g technology the list of companies that supply Huawei with components but also software that are now cutting off those supplies is growing of course Cal come Intel arm Panasonic Google as well so I guess the question is for how long can Huawei survive without those supplies of both components and software make or take eulogy by initial buy and they do that while the US has taken very extreme measures to target Huawei the u.s. is so powerful but why are they so scared of us I think they overestimate Huawei such a small company how come it's been paid so much attention around the world some would be chosen it wasn't way was it what receive it I'm excited that we have so much attention but I think they exaggerated our role in the world we haven't done any promotion yet but someone has already done such a great job of promoting us I'm so grateful are you looking to change your supply chains at all to ensure that you have the components that you need is that a process that you're looking at to Queenie and now I share about so we will maintain our existing supply chain and will continue to place orders with US companies but if they can no longer supply us the portion of our own in-house products will increase warm energy considered in banish earlier we will find our own way to solve our problems the critics of Huawei would say that you've got to where you are through intellectual property theft and government support what is your response to that mom until make one mean Kenny G sure don't make what do mutually which the US has not developed that technology so from where should I steal it it's more likely that they steal our technology now we are leading the u.s. if we were lagging behind Trump would not need to make so many efforts to attack us he attacks us because we are now more advanced than them in the past you've faced legal challenges from Cisco from Motorola from t-mobile what does that say about the culture at the company and what steps have you taken to address some of the issues that came up as a result of those legal cases what were they associated though he throw your Bank you first of all I think all these cases have been heard in court we should respect the courts judgments we require all of our employees not to do anything wrong in this regard woman take woman yes oh yeah we have a huge amount of Technology if asking us what contributions we've made for human beings we would say that we have over 90,000 patents many of them are patents we've obtained recently for information technology she told me your UI you can walk by Bush young Indrani she's a maid what rutaldo we've made huge contributions to the information foundation of the whole society among those over 11,500 core patents were filed in the US and the US government has approved them so we have patents in the US Nicci oh it is a new year Concha de ba ng German Kong yeah if they could understand the contribution of Huawei is made for humanity the dispute may be resolved if at a moment of national crisis the government came to you and said we need your help we need your cyber skills we need access to your network because it's for the good of the country for the good of the government for the good of the Chinese people how would you respond Jade do I look like a grönholm ender tedium we absolutely would never install any back doors we would never do that we serve human beings we don't serve intelligence agencies why should we install backdoors what are the practical steps for denying a request like that in China removing risky Bogard abode we've never done that a German newspaper released an article saying they could not find any back doors in Huawei systems in the UK Huawei was under the world's strictest scrutiny so we could earn the country's trust drinka sure but how is she no on me under such scrutiny it was as if we took off all our clothes to prove we have nothing to hide so the UK agreed to use their equipment coming up Huawei's founder tells me how he went from soldier to global tycoon and he opens up about his relationship with the daughter held under house arrest in Canada and now facing extradition to the US [Music] you [Music] Renjie Zhang Fei grew up in relative poverty his parents victims during the turmoil of the Cultural Revolution he tells me about those early years he struggles to start the business and he opens up about his family just sort of witchy this is my father he was a middle school principal okay this is my whole family let me smile oh gee this is my mother this is me just so what Dana gosh that's me when I was in the military talking to a French engineer how did you go from being an engineer in the People's Liberation Army to building and setting up quawi as a company in 1987 well ladies offending young Dwight you 28 just a woman JG why didn't you see him yeah my history can be divided into two parts the first part was when I served in the military when China was a planned economy before the big military layoffs Germany anyway it was dingy usually I just did you need to go home yet I was in the military elite but we all got laid off out of the blue throwing us into the ocean of the market economy I didn't understand the market economy at all hey Dee make your channel show you Coco Lee Chow free lunging we choked on tons of water in that ocean we didn't understand what the market economy was we lost lots of money because we trusted people too much what we couldn't afford to hire a lawyer so I read law books afterwards I realized two important things about the market economy one is the supplier and one is the customer what were your ambitions for the company back in 1987 hitomi a phantom we did sir what is he doing he drew I didn't have any goals at that time we didn't even have enough food I clearly recall when my daughter was very little her mother often told me that she needed to go to the market at around five a.m. to buy stale fish and shrimp the dead fish and shrimp was sold at a very cheap price in Guangdong she cooked it for our daughter to provide protein she said without enough protein children cannot grow healthy we could only maintain the minimum standard of living so we did not have any goals the goal was only to survive we didn't even know whether we could survive my most famous slogan of the company is survive survive and survive even today when we are like a damaged airplane our slogan is still to survive rather than any great ambition did you ever imagine that you'd be sitting here today in this position to see your sewing because I'm at meals you want Farkle Gingka actually if people don't desire much they can be more capable I don't desire much as you can see I don't want to take too much money I only hold a small portion of company shares people say I'm rich but back in 2000 I didn't even own an apartment the apartment I rented with my wife was only half the size of this room it faced west and had no air conditioner to bring a band under that ocean there was no turning back for us if we went backwards it would be poverty we went forward it would still be poverty but if we kept going there might be a slim chance of hope well there was absolutely no hope if we went backwards so we had to keep walking forward walking and walking all of a sudden we saw the sunshine we suddenly realized we were at the top of the Himalayas how did you manage to go from behind your competitors like Erickson like Nokia to being the leader in 5g what steps were implemented how did you manage to make that leap so here a woman to poppy is important this year though you let go song first of all we spent time at work when others were spending time having coffee in general we worked harder than others secondly we distributed what we earn to everyone rather than keeping it in our own pockets so we could attract many good scientists and talented people to join us do you have succession plans in place yeah I told you you know in Turku young we've had a succession plan for a long time we won't give the company to one single person we'll give it to a group with subgroups Trinity you can see the total to community Schengen in Safari yeah it's like a giant succession plan not a single person succession plan system or no this is Ming Guangzhou Wow beautiful when was this when was this ticketed or Marshall hope either it was taken last year early last year do you do you feel like you've become closer to one job yes she felt the importance of family so in a strange way it's brought you it's brought you closer and the family closer yes my daughter was barely talking to me before your daughter faces extradition to the u.s. from Canada and she's facing charges in the US of a fraud and breaking sanctions those are the allegations from the US side president Trump has suggested that he could intervene to help your daughter presumably you'd welcome that kind of intervention took a child Isis a self identical korchenko sure we find that Canada violated the law with this arrest we will point out these violations during the court hearings as air fighting shanking Qi which are that simple we find it too good if I couldn't do no way voluntee among one Jo has never committed any fraud which we've already made clear generator fighting sounds icky not for someone berkeley natural to you later two sites can present evidence in court we have evidence among his case is politically motivated do you think the legal action against Canada and the US is helping your cause or is there a risk that in inflames it inflames tensions now Wendy should I had made quoi the problem is that it's the US and Canada who sued us first then we countersued why are we the ones who have followed suit considered to be the ones disrupting the social order to get sushi no no needle swinging for warning if you knew it would disrupt the social order why would you sue us why shouldn't we file a counterclaim after you sued us they can't be that arbitrary the u.s. is a fair open and transparent country I have my right you have your right to sue me I have my right to defend myself have you spoken to your daughter recently you are how was she Hetal sure pathetic Junior she's studying her PhD while under house arrest turn that kielbasa coming up Huawei blacklisted run jung-bae on the impact of being cut off from major suppliers like Kalkan Intel and Google [Music] you [Music] the Trump administration's decision to choke off supplies of components and services to wait was a major escalation in the u.s. campaign against the company run John Fay tells me how he thinks that will impact their ambitions to be the global number one smartphone maker and also maybe more importantly what it means for their leadership in the 5g space I just want to also bring it back to some of the original topics we talked about at the beginning around the supplies we talked about how some of the major suppliers like Intel like Cal calm like arm Panasonic and Google are restricting their supply of components and software to while we just explained to us how you weather that storm really should wash a dish and make Ragusa the u.s. manages its own companies the u.s. is not the international police they can't manage the whole world the rest of the world decides whether they should work with us based on their own business interests and positions Jawa go back now to you home up with yo on their questionnaire now i'ma go to Portugal if some companies don't want to work with us it's like a hole in the airplane we're working to fix the hole but the airplane is still able to fly just you by your height refinishing care you bank or my make polishing pair of the chips we've been using half are from US companies and half we produce ourselves wrong what's wrong don't make work beyond thank you your boy Danish ahora if the US imposes further restrictions on us will reduce our purchases from the US and use more of our own chips yeah Thank You Josh dr. Koch wife and if American companies have permission from Washington to sell to us we will continue to buy from them what extent of damage how much damage do you expect to be felt in the consumer division of the business so smartphones and laptops which depend on us chips but also us software Joe you can air you Colin Papa Don me no image we might miss our expected growth target but we are still growing take 3 en and attacked my being able to grow in the toughest battle environment that just reflects how great we are do the actions that the US has taken does that mean that you're going to have to ramp up that R&D spending even more to develop your own in-house products and components Gorge Schofield Azure we set our sale prices relatively high our current prices are higher than Ericsson and Nokia so we can make lots of money no we're trying to campy outdoor shame how your family sure as long as we can afford to live and as long as we can survive we would like to invest more in R&D even during the most difficult time we still need to invest in the future otherwise we don't have a future you had bragging rights earlier this year you overtook Apple as the number 2 smartphone maker you saw smartphone sales in the first quarter jumped by about 50% and of course you do have that goal of becoming the number one smartphone maker in the world does that goal now have to be shelved that there are and Apple is as big as this we became a peach over the past few years a bit bigger than an apple we might become a plum incoming is smaller than an apple but still edible a plum is just a little bit sour and bitter around we quarter well creepy and that you keep it yeah we could become bigger or smaller we are not a public company we are not only pursuing growth or profit it's good enough for us to just survive which are legitimate order there have been calls by some in China for Beijing to retaliate against Apple is that a an action that China should be looking at taking treated yet that will not happen first of all and second of all if it happens I'll be the first to protest Apple is the world's leading company if there was no Apple there would be no mobile internet if there was no Apple to help show us the world we would not see the beauty of this world Apple is my teacher it's dancing in front of us as a student why should i oppose my teacher I would never do that well you've talked about having a two-year lead in terms of 5g on your competitors does that lead get eroded you know definitely if we slow down it's because the wing of the airplane has lots of holes if we fly slowly but others fly fast of course they can catch us up in treat young women now pour me a day but we will keep fixing the holes we will fly fast again once all the holes are fixed a lot of this may be all of this comes down to a question of trust and from the US side a mistrust of Huawei and of China do you think there are additional steps but you're on the steps you've already taken additional steps that you could take to improve that trust whether that is restructuring the company listing the company is there anything you can do to build on that we don't need to go public we are very clean so we don't worry about what other people say we won't go public you can wait I think it won't take long for while way to go public maybe 3,000 years what exactly have you put in place in terms of contingencies can you just give us a few more details around the contingencies that have been put in place - Jessica 15 if I don't gue yeah your column Mottola from peeler we might have contingency plans for the core of the airplane the engine and fuel tank but we may not have a plan for the wings we need to review the situation all over again and fix those problems you can come back to interview us in two or three years to see if we still exist if we're gone in two or three years please remember to bring a flower and put it on our grave thank you [Music] you

Channel: Bloomberg Technology

Views: 147,057

Keywords: Bloomberg

Id: 1ScMp855WQw

Length: 24min 6sec (1446 seconds)

Published: Tue Oct 01 2019