UK Markets closed

Huawei chief confident over future despite US export curbs

By Joe McDonald

The founder of Chinese tech giant Huawei has said he expects no relief from US export curbs due to the political climate in Washington, but expressed confidence the company will thrive because it is developing its own technology.

Ren Zhengfei also said he does not want relief from the US sanctions if it requires China to make concessions in a tariff war, even if that means his daughter, who is under house arrest in Canada on US criminal charges, faces a longer legal struggle.

Mr Ren said he was confident Huawei would thrive as it develops its own technology (AP)

In an interview with the Associated Press, Mr Ren said Huawei expects US curbs on most technology sales to go ahead despite Monday’s announcement of a second 90-day delay.

He said no-one in Washington would risk standing up for the company.

The biggest impact will be on American vendors that sell chips and other components to Huawei, the biggest maker of network gear for phone companies, Mr Ren said.

Washington has placed Huawei on an “entity list” of foreign companies which require official permission to buy American technology.

In an interview at Huawei’s headquarters campus in Shenzen, 74-year-old Mr Ren said: “Whether the ‘entity list’ is extended or not, that will not have a substantial impact on Huawei’s business.

“We can do well without relying on American companies.”

Huawei, China’s first global tech brand, is at the centre of a battle over trade and technology that threatens to tip the global economy into recession.

Mr Ren’s daughter was arrested in Canada (AP)

American officials accuse the company, which is the world’s second-biggest smartphone brand, of stealing technology and facilitating Chinese spying. Huawei denies these accusations.

The firm’s chief financial officer Meng Wanzhou, who is also Mr Ren’s daughter, is fighting extradition from Canada to face US charges related to possible violation of trade curbs on Iran.

Beijing has arrested two Canadians in a possible attempt to force her release.

Mr Ren looked relaxed and confident throughout the two-hour interview at a palatial new building in neoclassical European style where Huawei entertains customers.

The atmosphere was a striking contrast from a June 17 news conference at which Mr Ren compared the company to a “badly-damaged aeroplane” and warned US sanctions would cut Huawei’s projected smartphone sales by 30 billion dollars (£24.7 billion) over the next two years.

American president Donald Trump has suggested controls on Huawei might be lifted if Beijing agrees to a deal on trade and technology disputes which led to US tariff hikes on Chinese imports.

Mr Ren also said protests in Hong Kong, which is close to Huawei’s Shenzen base, would not affect the company (AP)

Mr Ren rejected this, saying Huawei could not ask for favours that might hurt the interests of China’s poor majority.

He added: “I couldn’t take it if those poor people sacrificed their own interests for the benefit of Huawei.

“Maybe my daughter will suffer more. But I would rather do that instead having the poorer people in China sacrifice for Huawei’s survival and development.”

The announcement of export curbs in May prompted warnings that sales of Huawei smartphones and other products that use US chips and other technology could be devastated. The curbs also mean a loss of billions of dollars in potential annual sales for American vendors.

Even before the announcement, Huawei was working on developing its own chips, software and other technology that might reduce reliance on American vendors. The company spent 15 billion dollars (£12 billion) last year on research and development, more than Apple or Microsoft.

Huawei reported sales in the six months through June rose 23.2% over a year earlier.

Its chairman, Liang Hua, said in July that Huawei was reviewing its core products to make sure they all could be delivered to customers without American components.

Mr Ren said: “At a strategic level, the US entity list is helpful to Huawei.

He said the company has responded by eliminating “marginal, unimportant businesses or products” and focusing resources on “major products”.

“The whole company can focus more on our most competitive products,” he added.

This month, Huawei unveiled its own smartphone operating system it said can replace the popular Android system from Alphabet’s Google.

Huawei’s phones still use Android but Google is blocked from supporting maps, music and other services.

Earlier this year, Huawei released its own chip for next-generation smartphones and the first phone based on that chip.

Mr Ren rarely appeared in public or talked to reports before his daughter’s arrest in December.

Since then, however, he has given a flurry of interviews to foreign reporters in an effort to repair the company’s reputation.

“I think it’s working,” he said.

Asked about ongoing pro-democracy protests in Hong Kong, which borders Shenzhen, Mr Ren said the violence was “not good for society and the people” but does not affect Huawei.

“There is no impact at all on Huawei’s business,” he said.

“We are still focused on our own production. We still focus on fixing the holes in our bullet-riddled aeroplane.”

Mr Ren, who has called himself a fan of the United States and publicly praised Mr Trump as a leader, said Huawei wants to retain technology collaborations with Google, Microsoft and other American developers.

“A strong position for Huawei in the market will translate into a strong position for US companies, because deep inside, our products are powered by American technologies,” said Mr Ren.

If Huawei is blocked from using Android and is forced to develop alternative systems, “it wouldn’t be in the best interests of the United States”, he said.

Mr Ren added that even if Huawei develops its own alternatives, it is willing to buy American components to support industry development.

“We hope we can and we will continue to be able to buy American components,” he said.

“Even though we may have the ability to turn out our own components or products, we would choose to reduce our own capacity so as to use more American components in order to contribute together to share the prosperity of society.”

Mr Ren said Huawei is planning as if the US export restrictions will remain in place.