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China's Huawei vows to become more transparent

A Huawei logo is seen above the company's exhibition pavilion during the CommunicAsia information and communications technology trade show i
A Huawei logo is seen above the company's exhibition pavilion during the CommunicAsia information and communications technology trade show i

By James Grubel

CANBERRA (Reuters) - Chinese telecoms equipment firm Huawei Technologies pledged on Wednesday to become more transparent, proposing to set up a cyber-security center in Australia to help address concerns that threaten to shut it out of key global markets.

Huawei, the world's second-biggest telecoms equipment maker, has been barred from a $38 billion project in Australia and is also under siege by U.S. lawmakers who suspect it has close ties to Beijing and that its equipment could be used for espionage.

"Huawei has done a very poor job of communicating about ourselves and we must take full responsibility for that," the chairman of its Australian business, John Lord, told reporters on Wednesday in what was a rare opportunity for international media to quiz a senior Huawei figure on the security concerns.

"Huawei has a duty to set the record straight, to dispel the myths and the misinformation," the retired admiral told the National Press Club in Canberra, denying there were any grounds for governments to fear Huawei.

Lord said Huawei proposed to set up a center in Australia to give security-cleared officials complete access to its software source code and equipment - similar to a center it established in Britain two years ago.

Huawei, the sole supplier of equipment for Britain's national broadband network, set up the UK center with the cooperation of the government, enabling Huawei's hardware and software to be tested to ensure against cyber security threats.

Huawei has also offered to undergo similar scrutiny in the United States, along with another Chinese telecoms equipment firm, ZTE Corp, the world's fifth largest telecom equipment maker.

However, a U.S. congressional intelligence committee has decided any such efforts would likely fall short of addressing security concerns, given the scale of the U.S. telecoms market, and it called for Huawei and ZTE to be locked out of the market.

The committee's report followed the Australian government's announcement this year that it had barred Huawei from participating in its $38 billion high-speed broadband network. Both those actions have in turn prompted Canada and Britain to look deeper into similar issues.

Suspicions of Huawei are partly tied to its founder, Ren Zhengfei, a former People's Liberation Army officer. Huawei, an employee-owned and unlisted company, denies any links with the Chinese military and says it is a purely commercial enterprise.

It is the second-biggest maker of routers, switches and telecom equipment by revenue after Sweden's Ericsson, but there is little public information about its operations.

HUAWEI LOOKS FOR LOCAL FACES

Lord, one of many influential figures hired by Huawei in Western markets to reassure foreign governments, said the company needed to do a better job to counter misperceptions.

"We sincerely hope that in Australia, we do not allow sober debate on cyber security to become distorted the way it has in the U.S.," Lord said.

Asked why Huawei did not bring forward its stated plans for a stock exchange listing in five to 10 years to appease concerns about transparency, Lord said the firm's focus was instead localizing the company's boards and activities.

"Would listing be the panacea that would solve all of this openness? At the moment the advice to us from experts outside of Huawei is not necessarily so," he said.

Huawei's board in Australia, created last year, was the company's first local board with non-executive directors and includes former foreign minister Alexander Downer and former premier of Victoria state John Brumby.

"We're developing a model and once that model is mature, that model will be exported to other regions and countries around the world, so that's the first step of us moving out," Lord said.

Huawei CEO Ren, who founded the company 25 years ago after he was laid off by the Chinese army, said during a visit to Australia in August that the company would begin reinvesting local profits back into the Australian market.

Huawei started in Australia in 2004 and has expanded its business across Australia, New Zealand and the South Pacific.

It has become a significant market force in the region, supplying equipment to Optus and Vodafone and conducting trials with Telstra Corp Ltd.

Huawei Marine Networks, a joint venture between Huawei and Britain's Global Marine Systems, is involved in building two telecommunications submarine cables between Australia and New Zealand and between Australia and Singapore.

(Additional reporting by Jane Wardell and Maggie Lu Yueyang; Editing by Mark Bendeich)

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