Huawei employee fired

Huawei Technologies Co. recently fired its sales director on charges of espionage conducted on behalf of China. He was reported to have been arrested in Poland.

Poland is Huawei’s headquarters for Central and Eastern Europe.

Background

Huawei is a Chinese technology company based in Shenzhen that manufactures and markets smartphones and telecommunications equipment around the world. Earlier this year, it became the world's second-largest smartphone maker, behind Samsung. It currently sells more phones than Apple.

Huawei is under investigation for potential violations of US sanctions against Iran. US lawmakers have repeatedly accused the company of being a threat to US national security, arguing that its Huawei-made telecommunication equipments may be designed to allow unauthorised access by the Chinese government and the Chinese People`s Liberation Army. Meng Wanzhou, the chief financial officer of Huawei and the daughter of its founder was recently detained in Vancouver at the request of US authorities. A spokesperson for Canada's Justice Department said that the United States wants to extradite Meng, and a bail hearing has been set.

Analysis

Wang Weijing, an executive of the largest telecom company, Huawei Technologies Co. was arrested in Poland on charges of espionage. Huawei fired him and said that he had brought the company into “into disrepute”.

The smartphone maker had recently made the headlines due to its chief financial officer, Meng Wanzhou getting detained in Canada at the request of US authorities due to accusations of breaching sanctions against Iran. However, The Chinese government strongly defended her.

According to Polish state television, Wang Weijing was locally known as Stanislaw Wang. Hs is a fluent Polish speaker and worked at the Chinese Consulate in Gdansk in 2006. He has been working as Huawei’s sales director in Poland since 2011.

Along with Weijing, a Polish citizen who once worked for a Polish intelligence agency but who was employed by European cellular carrier Orange was also detained on charges of spying. Both men have denied the allegations, which carry penalties of up to 10 years in prison.

The Chinese foreign ministry said that it was “highly concerned” about the case and later said that they were seeking to arrange a consular visit for Wang as soon as possible. The Chinese embassy in Poland has also asked Warsaw to “effectively ensure the legitimate rights and interests, and humanitarian and safe treatment of the person involved.”

In a statement, the Chinese company said: “His alleged actions have no relation to the company”. Besides, they said that “Huawei complies with all applicable laws and regulations in the countries where it operates, and we require every employee to abide by the laws and regulations in the countries where they are based.”

Wang’s arrest only hinders Huawei’s 5G aspirations. Countries including the United States, Britain, Japan, Australia and New Zealand had already moved to block Huawei technology because of security fears. This week, Norway’s justice minister, Tor Mikkel Wara, told Reuters, “We share the same concerns as the United States and Britain, and that is espionage by private and state actors.”

Counterpoint

Zhao Junjie, a research fellow for the Institute of European Studies at the Chinese Academy of Social Sciences, said that “If Poland wants to damage ties with China over the Huawei case, which is obviously groundless, it will be the biggest loser.” He mentioned that China had the upper hand in the trade relationship with Poland. Unlike many countries, Poland has been quite open in its choice of adopting Huawei technology.

Despite the worldwide backlash, the telecommunication’s company witnessed a 21 per cent increase for 2018. Last year, it had signed memorandums of understanding for 5G equipment with 45 operators in Asia, Europe and North America.

Assessment

Our assessment is that Wang’s arrest is only amplifying the concerns Huawei is presently facing. We feel that despite the company’s continuous denial of any involvement in espionage, the series of accusations have dented the trust quotient of the company. We believe that in the long run, Huawei will undoubtedly face business disruptions and target losses due to these factors. However, if the company were to present valid proof of non-engagement, it can indeed turn the tables and exceed their marked objectives.