In China

Later today I fly to Hong Kong, and then drive into China where I’ll be a guest of Huawei for five days. Their NZ arm invited me over to have a look at their operations, see some of their 4G networks in operation etc.

Huawei is now the largest manufacturer of telecommunications gear in the world. They have around 140,000 staff and annual sales of US$22 US$35 billion. Their customers include BT, Vodafone, Motorola, France Telecom and closer to home I think they are suppliers to almost every telco – Telecom, Vodafone, 2 degrees and Chorus.

Now some readers may be aware that parts of the US Government have alleged Huawei is a security risk, and their equipment allows the Chinese Government and the Chinese People’s Liberation Army access to any data on their networks.

There has never been any evidence of this, and personally my feeling is that this is more de facto trade protectionism from some US companies, trying to get rid of a competitor. Why do I think this? Well, take it in four parts – willingness, ability, secrecy and impact.

In terms of willingness, do I think the Chinese Government would have any ethical concerns about using a company to grab some unauthorised data. Absolutely not.

But the next question, is can you actually design equipment with a secret back door, that none of your customers can detect, and they don’t notice unauthorised data flowing through their networks.  I’m not an expert, but I don’t think it is that easy to do.

The big issue for me, where the theory falls down is how many people would have to be involved in the conspiracy for a major billion dollar company to be a front for the PLA. It would be at least 500 to 1,000 people. This couldn’t be done by one or two people. And my hard and fast rule is that any conspiracy that involves more than two people inevitably leaks out. Frankly it is the realms of fantasy to think an entire company could be installing secret back doors and not a single person would ever reveal the truth.

The fourth and final factor is impact. I’d say the economic success of Huawei is worth far far more to China, than any data they might pick up if there was some secret back door. If there was a secret back door, and it got discovered, it would destroy the company overnight. They’d lose every contract they have, and a $20 billion a year company would be worthless. So would you rationally make that choice?

As it happens I have a session with their head of security, and if any readers have questions they want me to ask, feel free to suggest them below.

Anyway the security issue is for me a bit of a red herring. I understand neither the NZ Government, or its security agencies, have found any justification for them at all. I only mentioned them here, as I’m sure people would raise it if I didn’t. The fact every telco in NZ uses Huawei speaks volumes. I’m a big believer in free markets and think it is great companies like Cisco and Alcatel-Lucent have vigorous competition. Consumers are the winners when you have competitive markets.

Now somewhat ironically, I’m not sure how much I’ll be able to blog while in China. Last time I was there in Beijing a few years ago, Kiwiblog seemed to be on the blocked list for the Great Firewall of China. So if you don’t see any blog posts for a while, that is why. However also in Hong Kong for a bit, so definitely will be able to do updates from there.