Chinese telecoms firm Huawei has denied reports of government ownership, stating that it is controlled by its employees through virtual shares.
The company was responding to a report published by American academics Christopher Balding of Fulbright University Vietnam and Donald C Clarke of George Washington University Law School on April 17. The duo said in their abstract: “The myth of Huawei’s employee ownership seems to persist outside of China… This article… aims to refute this myth once and for all.”
The US has warned its allies not to contract Huawei to build any part of their 5G technology
The paper highlighted that Huawei is fully controlled by a holding company, of which Huawei founder Ren Zhengfei owns just one percent. The remaining 99 percent is owned by a trade union committee, the company claims.
No information on the members of this committee is available. However, all official trade unions in China are supervised by the All-China Federation of Trade Unions, a Chinese Communist Party (CCP) body.
Clarke and Balding’s paper concluded: “Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.”
Speaking at a press conference on April 25, Chief Secretary of Huawei’s Board of Directors Jiang Xisheng refuted these claims. He told reports that around half of the company’s 180,000 employees own “virtual shares” that pay dividends and provide them with voting rights.
Jiang added that trade union ownership was simply a legal convenience as Chinese law applies strict restrictions to the number of shareholders allowed to own a stake in a company.
He said Huawei pays an annual fee to the Shenzhen municipal trade union, which conducts an inspection of the holding company’s trade union committee and renews its licence. Outside of this, he claimed that neither union plays a role in the day-to-day operations of Huawei, save for organising extracurricular activities for employees and soliciting donations for health and charity initiatives.
“We don’t have any other relationships with [the Shenzhen municipal trade union]. We don’t need to report our business operations. They won’t come to ask for anything either,” said Jiang.
The question of governmental involvement in Huawei’s corporate structure has been raised by a range of media outlets in recent months after tensions arose between the US and Huawei over the firm’s involvement in 5G network installation.
The US has warned its allies not to contract Huawei to build any part of their 5G technology, citing concerns that the Chinese Government could use them for espionage.
Jiang denied these allegations, saying: “Most of what the US Government says, as we all know, is not true.” He added: “There is no government capital in Huawei.”
Jiang’s comments, while indicative of Huawei’s push to persuade the media that it is not secretive about its operations, are unconvincing in the face of mounting evidence to the contrary.
Balding and Clarke’s paper presents a wealth of evidence that Huawei is owned only in name by employees, while the Chinese Government has an extremely well-documented history of both official and unofficial, disclosed and undisclosed, methods of exerting control over the country’s businesses.
Given the CCP’s strict control on foreign media access, it will likely prove extremely challenging for either the US or China to definitively prove or disprove espionage and business control claims.