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Huawei threatened to pull investment from Denmark in response to new screening law

The head of Huawei Denmark sent a letter to the Danish Prime Minister indicating it would rethink its involvement with the country if special security requirements were imposed on it.

The story was broken by Danish paper Berlingske and followed almost immediately by a similar story from Politico. Both are paywalled, but we’ve been able to have a look at the Politico one. At the core of the story is a letter sent by Jiang Lichao, CEO of Huawei Denmark to the Danish PM Mette Frederiksen, on 17 December 2019, which Politico has published here.

“There has been a perfect storm lately around Huawei 5G in the Kingdom of Denmark,” it opens. “The high diplomatic and political waves have almost thrown over a small boat called ‘Huawei Denmark’.” To understand what prompted the use of such a dramatic metaphor, we need to refer to a Berlingske report from a week earlier, which isn’t paywalled and has been published in English.

‘Banned recording reveals China ambassador threatened Faroese leader at secret meeting’ is the headline of the story. It covers an audio recording in which it is claimed that the Chinese Ambassador to Denmark threatened the Trade Minister of the semi-autonomous Faroe Islands, which are part of Denmark, with the withdrawal of a free trade agreement if Huawei didn’t get a 5G contract.

If that did happen, not only is it a scandal in its own right, but it calls into question Huawei’s repeated claims that it has no direct relationship with the Chinese state. It looks like the ‘hot mic’ recording was never published, but the furore generated by the story was apparently so great that Huawei felt compelled to appeal directly to the PM.

“Our relationship with the Chinese government is no different from normal business-government relations for private companies in other countries,” continues the letter, noting reports of a proposed new screening law for foreign investments. “Huawei welcomes laws and regulations as long as they are applied equally to all players… We are willing to dedicate our efforts to continue contributing to the Danish telecommunications networks. However the recent noises made us feel great uncertainty.”

In a bid to resolve that uncertainty, the letter asked the PM for answers to the following questions:

  1. If Huawei is still welcome to participate in developing telecommunication infrastructure, including 5G network rollout, in Denmark based on normal business terms and conditions?
  2. Will the same security requirements and standards be equally applied to Huawei as to other telecommunication equipment suppliers?

While not overtly stated, the clear inference is that if the answer is negative to either of those questions then Huawei will be forced to have a rethink about its participation in the Danish market. In isolation that’s not such a contentious position to adopt, but just a month later Huawei seemed to have no problem with the UK, and then the rest of Europe, imposing exactly the kinds of restrictions it had warned Denmark to avoid. That position was reinforced in its recent submission to the UK’s review of its Huawei decision.

For a local perspective we spoke to Danish telecoms Analyst John Strand. “Huawei usually says that they share our values and that they do not have close ties to the Chinese government,” he said. “The letters to the two Danish prime ministers contradict that. For one, the letters state that they work in concert with the Chinese government, something that their website and public statements have consistently denied. Moreover the notion that the Danish Prime Minister would muzzle the press at Huawei’s request is not consistent with our values.”

While the letter is now five months old, and Huawei may well have changed its position since then, this apparent evidence of Huawei and the Chinese state seeking to pressure governments over their security decisions is very uncomfortable for the Chinese vendor. It comes as Denmark embarks on a review of its critical infrastructure policies in the light of vulnerabilities exposed by the coronavirus pandemic and could well have implications beyond that country.

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24 comments

  1. Avatar Jacob Stein 14/05/2020 @ 4:21 pm

    Pretty ugly look. There’s no question that the Chinese government are ramming Huawei down the throats of other countries as hard as they can.
    Can you imagine the Swedish or Finnish governments doing the same? Kindof gives a lie to the position that this is normal industry-government interaction.

    • Avatar Mike G 15/05/2020 @ 12:46 pm

      The whole thing around Huawei is all about politics and technological competition between the US and China. China now is at 60-70% of the US GDP, and the later feels the pressure and then launched the war against China, just like it has done to Europe after the creation of Euro, to Japan, to Russia, and to South America. That is all, anything else are either lies or double standard.

    • Avatar Yoonsun 15/05/2020 @ 5:24 pm

      Fair completition is the best without politics involved like what USA is doing is not fair trade practices

    • Avatar Ming 15/05/2020 @ 9:11 pm

      China must protect it’s company which is treated unfair.

    • Avatar Kevin 16/05/2020 @ 4:55 am

      So, when President Trump issues order to ban on the US tech products to Huawei, all the US companies follow the order, does that mean all of them are connected to Trump’s govt?

      Oh Btw, which company in the world are totally independent from their govt? Conversely, which govt in the world can just ignore their responsibility to protect their own corporate citizens? Is it wrong if China helps to defend one of it’s major corporate citizens gets victimized or unfairly treated by other govt ?

  2. Avatar Gary setiadi 14/05/2020 @ 6:26 pm

    Huawei typically makes a lower margin in their equipment compared to European vendors and needs to make that up in volume.

    The Danish telecoms market is very small. It is not worth the high cost of doing business in the country of there are a lot restrictions and regulations specifically apples only to one company. I know that Ericsson have also pulled out of countries which they deem to be unprofitable.

  3. Avatar Samiullah Khan 15/05/2020 @ 8:07 am

    Rubbish, when u stood for Samsung, Apple etc., Its right but when China just say something in favour of Huawei, it becomes a sin…….! Come out guys from trade Hippocratic approach and compete the technology.
    Competitors are loosing, I wish they don’t loose it completely.

    • Scott Bicheno Scott Bicheno 15/05/2020 @ 9:10 am

      Eh?

    • Avatar Charlie Fernandes 15/05/2020 @ 9:57 am

      This is not even a surprise and did anyone ever believe that there is no link between Huawei and the Chinese government. The strategy of China Inc. stays the same – offer overall initial investment and support (loans, build infrastructure, etc), make economies need them, use that to leverage other businesses (like telecom), and arm twist or threaten or blackmail if things don’t go their way. I’m pretty sure this happens much more often than is reported.

      The big question is – why is China Inc . pushing so hard in the telecom sector? If they build the network, they could also potentially control it. While there may be no backdoor now, this could be done ‘on the quiet’ in the future. Furthermore, who better to hack into a network, than the guys that built it. This is just isn’t business-as-usual, but a takeover of digital information. The U.S., Australia, Japan are smart in taking a hard stand again Huawei (and China) with 5G coming into play.

      • Avatar Mike G 15/05/2020 @ 12:53 pm

        The US government is giving money to all US companies now, it did the same thing during 2008 financial crisis. By attacking Huawei, it is helping the US companies like Apple. So apparently they have double standard here. It helped GE to kill its competitor, the French competitor Alstorm. It helped American auto companies compete against the Japanese companies like Toyota, Honda. Double standard.

    • Avatar Sze king wah norris 15/05/2020 @ 11:38 am

      Let Nokia be the only 5G player in Denmark without any competitor.

    • Avatar Toka 15/05/2020 @ 11:49 am

      China has always companies within it to get secrets of other governments. They want to control everything and its killing it little by little. I have seen it here in africa, they feeding their greedy desire to be in charge.

    • Avatar Janes Malone 15/05/2020 @ 4:26 pm

      The UK security agency confirmed that Huawei 5g risks can be managed. This is nothing more than protectionism and the fact china being a rising superpower than it really has to do with security.

  4. Avatar Benson Royston 15/05/2020 @ 3:01 pm

    At is about race, there is no other truth
    Which companies are not obliged to their government? When America bailed out their companies from the financial crisis, they claimed that it us too large to fail. The West, mainly America is afraid of Chinese competition. The Chinese can work harder, priced their products lower and are not whiners like their Western competitors.

    • Avatar John 15/05/2020 @ 11:26 pm

      They should be tough on huawei. You have to be a fool to let a snake in the chicken coop. China doesn’t even care about human rights…. What makes you believe they want to help other countries.

    • Avatar Jacob Stein 16/05/2020 @ 9:29 am

      I don’t see western companies whining. Does Ericsson whine about Huawei – no. Nokia – no. The US Government does, but that is because the Chinese have not just tilted the field in their favour, but tipped it on its side. Stories are rife in the industry of Huawei offering networks for free, with 115% finance spread over 30 years. Could Ericsson offer that? Nokia?
      So are we wrong to complain that this is nothing approaching fair competition? And even then Nokia and Ericsson have hardly breathed a whisper of complaint – they have just sharpened their pencils, put their engineering bases in India, much to the concern of their home countries, and got on with it.

  5. Avatar Ricky Miller 15/05/2020 @ 7:45 pm

    Right. Certain countries can wage war on a Chinese company because it is winning way too much but if China’s government advocates and runs interference for that same company it’s proof of a conspiracy. Articles like this are proof that Western media cannot be trusted to cover issues fairly.

  6. Avatar Sean McMahon 15/05/2020 @ 8:09 pm

    Some unusual comments here.
    I would not like to live in a one party country and becoming reliant on such a country would be worrying. Huawei seem to have an ability to undercut all competitors and it’s understandable that private industry would want to use that competitive advantage but at what cost?

  7. Avatar Ming 15/05/2020 @ 9:14 pm

    China should beat Danmark very hard for it treat Huawei unfair.

  8. Avatar Kwan WOO 16/05/2020 @ 8:41 am

    There’s no difference between China and the US. If China imposes restrictions on US firms, the US government will retaliate. This got nothing to do with firms being reporting to the US . The US government has to protect American firms around the world. Chinese government would do the same.

  9. Avatar Jacob Stein 16/05/2020 @ 9:20 am

    No, the Chinese don’t work harder, they are enslaved. I have many friends in Huawei, have worked there myself, and talking to the ethnic Chinese who have worked since 3am to install unauthorised patches in the RAN, they are straight up about it – if I don’t do it there are 10000 others just like me who will, and this job pays better than anything else I will ever have, so what option do I have?
    This is not the world that the west lives in, the employees of Huawei live in trouble – they get it – do what is asked or you will be replaced, without so much as a second thought.

  10. Avatar Shee xinpooh 17/05/2020 @ 12:37 pm

    Reality is maybe china is doing the same that US UK or European colonial countires were doing earlier. Like if huawie can snoop so can US technologies and infact both do the same.
    I would like to be snooped by US or liberal europe then the dictator communist China. Specially after Corona.
    ……………. BUT
    …………….NO ONE TRUST THE CHINESE ……………….
    BAN huawie

  11. Avatar Graeme Bellis 18/05/2020 @ 2:19 am

    Huawei and the Chinese Communist Party (CCP) are clearly bullies. They are both in lock-step and their protestations are weak and illogical. But they seem to think that Western Governments are “on the ropes” because the West has allowed China to subsume some level of economic sovereignty over them. As the COVID pandemic has shown it is time to take that back that sovereignty – unless weak Western Governments want to become a motley bunch of vassal states to China. This will happen if the so-called “Belt and Road Initiative” from China is taken-up. Politicians in Europe and elsewhere need to show some gumption! Believe in your own country and not some bully telling you what to do while holding out a pathetic handful of Yuan.

  12. Avatar Leo 30/05/2020 @ 2:57 pm

    I wonder did the letter include any counterbid to buy Greenland?

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