What is Huawei? Chinese tech firm under microscope after CFO's arrest

Friday, 07 Dec, 2018

Canadian authorities arrested the chief financial officer of China's Huawei Technologies on Wednesday for possible extradition to the U.S.

Justice Department spokesman Ian McLeod says in an email that Wanzhou Meng was arrested Saturday. He added that a publication ban requested by Meng prevented him from providing any further details.

'The Canadian police, at the request of the United States, arrested a Chinese citizen who had not violated any US or Canadian law, ' the embassy said in a short statement on its website.

The South China Morning Post said that Ms Meng has spoken to Huawei staff in a recent internal briefing on regulatory compliance. "The company believes the Canadian and USA legal systems will ultimately reach a just conclusion".

'China has already made solemn representations to the United States and Canada, demanding they immediately correct their wrong behavior and restore Ms Meng Wanzhou's freedom'. She was arrested December 1 after the U.S. Department of Justice in April opened an investigation into whether the telecommunications giant sold gear to Iran despite sanctions on exports to the region. It appears that the arrest is likely in connection to an ongoing United States investigation into Huawei allegedly violating worldwide sanctions against Iran and North Korea. Huawei said it complies with all laws and rules where it operates, including export controls and sanctions of the United Nations, the USA and European Union. It surpassed Apple in smartphone sales in the second quarter of this year, leaving it behind only market leader Samsung.

Meng's arrest has "potentially huge implications" for the trade war and signals the USA government is willing to get tough on Chinese companies that do business with Iran, according to Michael Every, head of Asia-Pacific research at investment bank Rabobank.

But Drew Thompson, a former director for China, Mongolia and Taiwan in the US Department of Defence, said Meng's detention should not be conflated with the ongoing trade negotiations between the US and China.

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"We will closely follow the development of the issue and take all measures to resolutely protect the legitimate rights and interests of Chinese citizens", the Chinese Embassy said. Huawei supplier STMicro STM.MI lost 4.7 percent, AMS AMS.S 6 percent and Dialog Semi DLGS.DE 2.6 percent.

Hu Xijin, editor-in-chief of the Global Times (one of China's most hawkish state-run newspapers), commented on his Twitter account that "The U.S. can't beat Huawei in the market". "A fragile trade truce between China and the US that was already foundering is now at greater risk of unraveling in relatively short order", Prasad said.

Under former President Barack Obama, the US government pressured allies to limit their use of Huawei technology due to security concerns.

"We'll see more cases like this over the next three months, sanctioning China's state-owned enterprises and individuals, to boost momentum on the USA side", Liu said.

U.S. media have reported that Huawei is under investigation for potential violations of U.S. sanctions against Iran.

The export-oriented DAX .GDAX index, which has been weakened by concern trade tensions would curb growth in China's economy, fell 2.2 percent. At this point it's fair to say most of the goodwill coming out of last weekend's G20 meeting between Presidents Trump and Xi has evaporated.

- Espionage worries - Huawei is one of the world's largest telecommunications equipment and services providers. For example, a management company that was controlled by Huawei's parent company in 2007 held all of Skycom's shares, and Meng at the time was that management firm's company secretary, Reuters reported.