Monday 14 October 2019

Who's afraid of Huawei? Inside China's controversial tech giant

The big read: The thunderous advance of China's Huawei has triggered global angst about the security of our phones. Technology editor Adrian Weckler went to Shenzhen to see for himself

Pro pilot: Adrian Weckler at Huawei’s HQ in Shenzhen, China. The tech giant is now the second biggest smartphone maker in the world, ahead of iPhone and just behind Samsung
Pro pilot: Adrian Weckler at Huawei’s HQ in Shenzhen, China. The tech giant is now the second biggest smartphone maker in the world, ahead of iPhone and just behind Samsung
Joe Kelly, a Donegal expat who is now Huawei's vice president for corporate communications
Paul Scanlan, the tech giant's chief technology officer
The Huawei facility in Shenzhen is made up of 12 sections or ‘towns’, each styled after a famous European landmark
A train approaches the ‘Paris Station’ at the 10 square kilometre site
The production line produces a finished €900 phone every 28 seconds
A worker in Huawei's Cyber Security Lab
Shenzhen, once a coastal fishing village, is now a booming metropolis of 20m people
The Chinese delegation that visited Shannon in 1980 was led by Jiang Zemin, who would later become President of China
Adrian Weckler

Adrian Weckler

It's 9pm in the Industrialist, a cafe pub in Shenzhen.

A couple of middle-aged westerners are messing with guitars in the corner. They're trying rock ensembles but struggling with vocals.

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"The Beatles?" I ask, approaching.

Before they can object, I belt out a volley of McCartney to their strumming.

Joe Kelly, a Donegal expat who is now Huawei's vice president for corporate communications
Joe Kelly, a Donegal expat who is now Huawei's vice president for corporate communications

It takes. Within a few minutes, we're properly jamming: a makeshift expat band drinking weak imported beer in a cranny of the world's fastest growing city and the nexus of China's economic boom.

We're not bad. A raucous rendition of 'Hey Jude' brings the bar's Chinese drinkers to their feet in chorus.

"You've a good voice, man," says the bass player, a fifty-something Australian with a shaved head.

From a snatch of overheard conversation earlier, I know he has some role in Huawei, the controversial telecoms company I'm in China to look into.

What I don't know is that he is Paul Scanlan, the tech giant's chief technology officer, one of the firm's most senior minds and someone who likely has the answers to everything that I, as well as half the western world, am curious about.

Is this meeting pure coincidence? Serendipity? Or something else?

The Huawei facility in Shenzhen is made up of 12 sections or ‘towns’, each styled after a famous European landmark
The Huawei facility in Shenzhen is made up of 12 sections or ‘towns’, each styled after a famous European landmark

Whatever it is, we agree to meet the next morning in his office for a formal interview.

And then it's back to business. He starts the chord for a verse of 'Let It Be'.

Of all the bars in all the world.

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There can scarcely be a more controversial company in the world right now than Huawei. Facebook and Google may be the bêtes noires of the media. Twitter may be home to cranks, snowflakes and nazis.

But Huawei is the only one caught in a new Cold War between East and West.

The production line produces a finished €900 phone every 28 seconds
The production line produces a finished €900 phone every 28 seconds

For the uninitiated, Huawei is a giant telecoms firm that specialises in two things: making phone network equipment for operators (like Eir and Vodafone) and manufacturing smartphones.

It's the phones that most of us recognise it for. Huawei is now the second biggest smartphone maker in the world, ahead of the iPhone and just behind Samsung. About 200,000 Irish people use one of its mobile phones, from budget models to universally praised flagships like the P30 Pro.

But its success as an equipment supplier for phone networks is the thing that has the world's eyes squarely on it.

Huawei has quickly risen to become the world's most advanced supplier. That means that operators around the world are flocking to it for the technology to roll out new, faster '5G' mobile networks.

And that is becoming controversial.

No Chinese company has ever become this competitive. No Chinese firm has ever established itself as a bedrock of critical technology in so many western countries before.

The Chinese delegation that visited Shannon in 1980 was led by Jiang Zemin, who would later become President of China
The Chinese delegation that visited Shannon in 1980 was led by Jiang Zemin, who would later become President of China

In Huawei's case, its great success now brings fear and suspicion in certain quarters. The US government, in particular, has spent two years ratcheting up rhetoric against Huawei, arguing that Chinese companies cannot be totally separated from the Chinese government, itself a source of unease for many westerners.

Basing critical mobile phone networks on Chinese technology, they say, inevitably means a security risk.

A worst case scenario, they argue, is that the Chinese government could order the company - either publicly or privately - to give them a 'backdoor' listening facility. Or it could mandate some sort of secret 'kill switch' to disable critical communications infrastructure at a sensitive moment, such as during a cyber attack.

Scanlan will tell me, over two hours of coffee, technical illustrations and chalkboard network schematics, that this is nonsense. He will say Huawei doesn't actually have the capability for such control, especially when it is operators (like Eir or Vodafone) who have most of the switches. He will point to all the countries in Europe and beyond who don't share the US government's view of things.

And he will echo suggestions from other Huawei executives, as well as several analysts, that the company is simply caught in the crossfire of a much larger, much more complex geopolitical standoff between the two great economic powers of the world.

This synopsis will be one I hear a lot in the Chinese headquarters, from one of founder Ren Zhengfei's aides to Donegal ex-pat Joe Kelly, now Huawei's vice president for corporate communications.

But when your main accuser is the US president and some of the US intelligence community's top brass, it's a hard one to shake.

And it is taking a toll.

Two months ago, US president Donald Trump signed an executive order banning companies from doing business with Huawei. It has rocked the tech world. Huawei runs on Google's Android system and is also dependent on apps like Facebook, as well as US-made chips, for much of its smartphone business.

If the ban stays in place, most analysts predict that it will have a devastating effect on Huawei's smartphone business everywhere outside China. But it also threatens a new technological arms race: China's president, Xi Jinping, has already called on the country's citizens to prepare for a new "long march", echoing Chairman Mao's famous movement 80 years ago.

Since Trump's ban was announced, a growing list of pivotal US companies have felt compelled to add themselves to America's do-not-trade-with-Huawei list. These include Facebook, chip-maker Qualcomm and others.

Huawei is now seen as a fuse by economists and defence analysts, who are warning about what Bloomberg calls "a superpower slugfest for mastery of the global economy".

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Shenzhen has a very different flavour of communism to the one I grew up reading about. There are Mercedes, Teslas and Porsches everywhere. Starbucks, Apple Stores and McDonalds line the streets.

Local developers build apartment or office blocks, most of which are over 40 stories in height, and become millionaires.

The average wage in Huawei's R&D campus, I'm told by an executive there, is $75,000. (There is some dispute over this figure.)

But it needs to be. Property prices in Shenzhen have gone through the roof. A two-bedroomed apartment near one of the business centres can cost well over €400,000.

Childcare costs hundreds per month in cash.

If this is communism, it's one that Johnny Ronan would be comfortable with.

The story of Shenzhen itself has an unlikely connection to Ireland. In 1980, the area was just a coastal fishing village. Then a Chinese delegation flew to Shannon to find out more about how special trade zones work. They returned to China and started building Shenzhen. 40 years later, it is a booming metropolis of 20m people, adding around 1m per year.

The Chinese government has a loose plan to connect Shenzhen, Hong Kong and Macau in a giant bay area metropolis that might have 50m people.

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In the middle of this boom sits Huawei.

Few western journalists get to see the inside of the world's most controversial tech company. But as I walk around the inner sanctum of Huawei's different campuses, I'm a little disoriented. It's not what I was expecting.

Forget every image you might have of a Chinese tech facility. Forget notions of thousands of workers bent over production lines while cross-looking supervisors with clipboards watch their every move. Forget the bland, grey factory buildings. Forget the low wages. Forget the sea of bicycles.

They may still exist in other parts of this Asian giant, with its 1.4bn people.

But Huawei's headquarters - like Shenzhen - is nothing like this.

It's nothing like anything I've ever seen.

It resembles a cross between Google's Californian headquarters and Disneyland; Las Vegas without the vulgarity.

Imagine if Intel, Facebook and Snapchat decided to build a joint campus on the outskirts of Blanchardstown. But instead of ordinary shiny tech buildings, they decided to pick European castles and well-known French, Italian and German historical landmarks as the buildings.

Now multiply that by two. And imagine it's perched next to a city that itself resembles some sort of fusion between Dubai and Hong Kong. Except it's three times the size and keeps adding a million new people every year.

This is what I'm thinking as I walk in between labs at the company's new research and development campus, just north of Shenzhen.

Ten square kilometres in size, the facility is made up of 12 sections or 'towns', each styled after a famous European site. There's Verona, Versailles and Bruges, each with their own landmark castle, villa or building in the style of the original citadels, some 7,000km away.

Walking around it in the 30-degree humidity of a June day is slightly surreal.

The purpose of this novelty campus is, I'm told, to make the 38,000 engineers and scientists here feel more creative and relaxed and inspired.

It's taken to quirky extremes. Crossing a bridge over the lake dividing the campus, you can hear what sounds like ducks or geese. Closer inspection of the shoreline reveals the 'birds' to be audio speakers placed at the side of the lake to give the impression that there are ducks or geese as you stare at the teutonic towers.

It's a bit of Westworld amid the Westphalia.

But it's not until I get to the actual production line, a car ride away, that I see the real robots.

Now I'm on the factory floor where Huawei's P30, the phone that has seen it become the fastest-growing major handset manufacturer in the world, is physically put together.

The production line produces a finished €900 phone every 28 seconds.

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I can't tweet or Whatsapp or Instagram any of this.

Not because I'm honouring a corporate condition of visiting the facilities. But because I technically can't.

Other than the size of the skyscrapers, the first thing you notice when crossing the border from Hong Kong is the blank phone screen. The 'great firewall of China' blocks Google, Facebook, Twitter and hundreds of other commonly-used information sites.

And it's effective. My normally-reliable tech tools for getting around such firewalls, such as a 'virtual private network', don't work.

For a visiting westerner, it is irritating. For locals, it may mean something a little more controlling.

While I am in Shenzhen, the 30th anniversary of a student protest in Tiananmen Square event is being remembered. But not in China. As I look through local newspapers or watch TV bulletins, I cannot find a single mention of the episode which cost hundreds, if not more, of lives.

At a cafe in Shenzhen, I ask a local group of people, who all look under 30, about it. Only one has even heard of the protest 30 years ago. And that was from a movie she saw online through a (banned) virtual private network internet connection.

I prod the group a bit more about it. But none of them even seem curious or interested. History is a bit boring, one tells me.

Shenzhen is one of the most liberal parts of the country. Yet what westerners regard as one of the most significant historical events in China over the last 50 years appears to have been airbrushed out of consciousness.

The young men and women I'm chatting with are not apparatchiks, either. They are modern-looking kids in jeans, t-shirts and runners with laptops open on café tables. They ride electric bikes and scooters or drive European cars. They say they live in comfortable, well-equipped - if small - city apartments.

As for the lack of Google or Whatsapp, the Chinese have their own apps and social media. Baidu is for search and maps, while WeChat is an all-in-one substitute for Whatsapp, Apple Pay and Stripe. (WeChat is a survival tool in China: there's almost no day-to-day expense you can't pay for with it. At one point, I can't get a taxi on a bustling street because they're all set up for mobile payments instead of cash.)

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It's tempting to ask Huawei's chief technical officer, the man I jammed to Beatles songs with the night before in a bar, about all of this. Paul Scanlan has been there 11 years.

But I'm in his office to ask about the company itself.

The questions I have are mostly the ones everyone in the west is asking. Does Huawei have the capability to 'switch off', or otherwise interrupt, any element of a western 5G mobile network remotely from its headquarters? Are there any so-called backdoors that it can exploit?

"I've been here 11 years and there is no backdoor," he says.

"If any of what you're suggesting were to be real, the company would cease to exist. No-one would use us anymore."

That's the short version of our conversation. A much longer version is filled with technical discussions about 4G, 5G, gateways, routers, radios, 'core' kit and operators. These are illustrated through graphs, chalk-drawn schematics and overlays.

What is scheduled for 30 minutes becomes 60 minutes. Then 90 minutes. Then two hours.

I'll say this: Scanlan makes a technically articulate case as to why the accusations against Huawei seem tenuous.

Two weeks ago, Donald Trump underlined that sense of tenuousness, hinting that Huawei's security risk status might be improved if a separate trade agreement was reached with China.

Scanlan points out that in the countries that Huawei does have established networks, there is transparency and trust. This applies even in steadfast allies of the US, such as the UK, where GCHQ intelligence has given Huawei a benign seal of approval.

"No-one provides transparency for source code like Huawei," says Scanlan. "We're the only company who is open to that degree."

Across town later on, another western Huawei executive will frame it for me in even more direct terms.

"We're not a cyber security threat to anybody," says Joe Kelly, a Donegal expat who has risen to become Huawei's vice president for corporate communications.

"More than three billion people use our technology around the world. If Huawei was doing something bad, somebody would definitely collect evidence. But there is no evidence. In 32 years in business there have been no cyber security incidents, never a backdoor found, even though everyone is constantly checking our technology."

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Can we take this as read for Ireland?

Back home, national telecoms operators have had a decent relationship with Huawei. Eir recently signed the Chinese firm for its upcoming 5G mobile network. Three Ireland, the country's second largest mobile operator may yet do so, although insiders say that it has been slightly unsettled by the recent international controversy around Huawei.

Otherwise, Huawei works with Siro and Imagine.

Relations with the government have also been good.

This is partially because Huawei has established commercial and research bases in Ireland employing over 170 people and spending over €30m on research and development here.

Company executives say that they were therefore a little surprised when Taoiseach Leo Varadkar appeared to agree with President Trump that the government "shared US concerns" about the company during the US leader's visit here 10 days ago.

The discomfort, however, was smoothed over when Minister for Foreign Affairs Simon Coveney later rowed back on Varadkar's remarks, with government sources putting the remark down to a throwaway comment intended to curry favour with Trump in the moment.

There are domestic critics. The outspoken founder of telecoms firm Rivada Networks (and occasional political activist) Declan Ganley is a frequent dissenter from European calm over Huawei.

"In a cyberwar, if you wanted to take down the electrical grid in a city like New York, all you'd have to do is get everybody's air conditioning turned up by two degrees on a hot day," he recently told this newspaper. Ganley added that Chinese companies may not ultimately be able to resist domestic pressure from the Chinese government. Asked about this, Huawei founder Ren Zhengfei recently told the BBC that he would shut the company down rather than obey such a mandate from Chinese authorities.

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Ultimately, Irish - or even EU - approval of Huawei's technology won't solve its immediate problems.

Its network business is set to survive around the world but it is badly caught in the middle of a trade war. It may lose key supplier relationships with Google and other tech giants as a result.

Everyone I talk to in the company's Chinese labs and headquarters puts a brave face on this. The tech giant "has been planning" for something like it, I'm repeatedly told.

Such plans will become clearer in the coming months, they add, hinting at a major announcement to come in the Autumn - possibly either a re-orientation of its phone interface (away from Google) or a new plan of "self-reliance" for its chips and other components.

Luckily, I am sitting across from the person most likely to know about such an event.

I ask Paul Scanlan directly: what are we going to see? When are we going to see it?

Scanlan smiles but isn't about to give anything away. He has already spent a few unscheduled hours explaining to a Beatles-singing Irish tech journalist how the world's most talked-about tech company does its business.

But he has to return to dealing with all of it in real time. Things are moving quickly. Chess pieces are racing across the geopolitical and technocratic boards.

My nine-day Chinese visa, too, is an issue. Like my singing voice, it is just about up.

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