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The world's largest telecom company in China is scaling back its operations in Europe, displacing its seasoned Western lobbyists, and shelving its aspirations to control the world.
According to interviews with more than 20 current and former staff members and strategic advisers to the company, the reasons for doing this have very little to do with the company's commercial potential — Huawei is still able to offer cutting-edge technology at lower costs than its competitors — and everything to do with politics.
Pressured by the United States and increasingly shunned on the Continent it once considered its most strategic overseas market, Huawei is shifting its attention back toward the Chinese market, concentrating its remaining European attention on the few nations — Germany and Spain, but also Hungary — still willing to play host to an organization widely viewed in the West as a security risk.
One Huawei official added, "It’s no longer a company floating on globalization." Like most of the other Huawei employees interviewed for this article, the official spoke on the condition of anonymity to candidly characterize the business's struggles, saying, "It is a company saving its ass on the domestic market."
Ren Zhengfei, the company's founder, succinctly described Huawei's situation in a lecture to executives in July at the company's Shenzhen headquarters. He listed the three main difficulties the business has seen in the previous three years: hostility from Washington; supply chain problems caused by the coronavirus outbreak; and Russia's invasion of Ukraine, which has increased European concerns about over-dependence on nations like China.
Ren stated in his speech, "The environment we faced in 2019 was different from the one we face today. Don’t assume that we will have a brighter future ."
"We previously had an ideal for globalization striving to serve all humanity. What is our ideal today? Survival!" he continued.
The senior Western management the corporation hired only a few years ago to defend against the U.S. assault on its business are being sidelined or fired as the company enters a state of slumber in the West.
Westerners were taken into consideration, according to a Huawei employee based in Europe. According to him, t his is not the situation now, and nobody is paying attention.
Formerly a crucial centre for Huawei to advocate against European limits on its equipment, the Brussels office has been fully incorporated into European management, which is now based in Düsseldorf.
Phil Herd, a former BBC journalist who joined the company in October 2019 at the start of its fight against political pressure in Europe, left his position as head of communications this summer. Additionally, the agency recently lost at least three other crucial employees who handled lobbying and policy. The main representative to the Brussels institutions, (Tony) Jin Yong, currently oversees government affairs in Western Europe and works primarily out of the Düsseldorf office.
Paul Harrison, Huawei's U.K. Director of Communications in London, departed his position in October, and other officials followed suit shortly after. Harrison worked as a senior news editor for the UK before joining Huawei. Sky News will broadcast in 2019.
According to the neighborhood publication Challenges, the company's marketing and communications director in Paris, Stéphane Curtelin, resigned from his position in September. Prior to that, Vincent de Crayencour, a seasoned French cybersecurity specialist with substantial government experience who joined Huawei in 2020, left his position as Head of Government and Security Affairs at the Paris office. Linda Han, the organization's Chief Representative of the Paris Office, also resigned from her position before the summer.
Szymon Solnica, the company's local PR manager in Warsaw, left Huawei in September. "The crises I’ve dealt with on a daily basis in recent years were colossal ones," according to his LinkedIn post announcing his departure.
In approved interviews, Huawei officials characterized the departures as routine employee turnover. In an approved interview conducted last week, a representative for Huawei Europe said: "There is a fluctuation always in companies, not only in Huawei … Some people are leaving and some other people are coming."
However, others within the organization admitted in private that the departures reflect a significant change that started in September 2021.
After spending nearly three years in Canada awaiting extradition to the U.S. on allegations of conspiracy to commit bank fraud and wire fraud, Meng Wanzhou, Huawei's top financial officer and Ren's daughter, returned to the company's headquarters in Shenzhen at that time.
One official claimed, "The moment Meng got off the plane was the moment the globalist Huawei died."
In the legal and public relations battle between Huawei and Washington, Meng played a crucial role as the founder's daughter and the presumed heir to the company's leadership. After returning from her trip to Canada, she rose to the position of deputy chairwoman at Huawei's corporate headquarters, which led to a top-level organizational restructuring.
During the height of American pressure, (Catherine) Chen Lifang, who oversaw the company's worldwide communications division, was transferred from the board of directors to a position on the supervisory board.
Peng Bo, formerly Huawei's president of Western Europe, currently serves as the global comms department's representative on the board. He is also known as Vincent Peng in Europe. The corporation is attempting to relocate its European operations closer to Shenzhen as a result of Peng's ascent.
Guo Aibing, a former journalist for Bloomberg News in Hong Kong, is in charge of the initiative to modernize public affairs in Europe. After being dropped into Europe by helicopter, Guo is implementing cuts and consolidating the company's lobbying and communication efforts on the Continent.
Additionally, the business is revamping its operations across Europe. The corporation has unannounced intentions to integrate all of the Continent's operations into a single region, with a Düsseldorf headquarters.
Currently, Huawei splits the Continent into two markets: Western Europe, run out of Düsseldorf; and Eastern Europe and the Nordics, run out of Warsaw with a senior executive.
According to a Huawei Europe spokesperson, the restructure "will help us to bring more synergies within the whole European business operation; will bring more value more directly to our customers here in Europe."
The representative stated that the company's overall workforce levels, which are now approximately 12,000 people, will remain "stable."
Ren claims that the corporation is also cutting jobs elsewhere. In his speech this summer, the company's founder stated, "We will give up markets in some countries. For example, we will give up markets in the Five Eyes countries and India."
The United States, United Kingdom, Canada, Australia, and New Zealand have an agreement to share intelligence that is known as the "Five Eyes." Due to security concerns, all five of these nations have prohibited Huawei and other Chinese corporations from using their vital infrastructure or are in the process of doing so.
Instead, Huawei is focusing on its home market, which makes up a sizable piece of the global 5G market and where Nokia of Finland and Ericsson of Sweden are battling it out for market dominance.
For a firm that until recently invested millions of euros in lobbying and PR operations in an effort to increase and preserve its European footing, Huawei's strategic retreat is astounding.
Many people in Europe thought of Huawei as a pleasant face among the IT companies cosying up to power for the most of the 2010s. Peculiar in its methods, sure, but friendly and — to many — advantageous to the interests of the Continent because it increased competition and reduced the cost of the newest telecom networks.
The corporation became well-known for its opulent celebrations in posh locations with upscale buffets and dance performances as well as its big gift bags, which frequently included a Huawei phone. One such celebration of the Chinese new year took place at the Concert Noble in Brussels.
A later turbocharged response to political pressure from Washington over worries that the Chinese-built telecoms infrastructure poses a severe security and surveillance danger included glitzy parties.
Under U.S., those headwinds started to blow. Following Donald Trump's victory, the administration of President Barack Obama intensified into a cyclone. By 2019, the firm was subject to American sanctions, and Ren's daughter Meng was in Canada awaiting the outcome of an extradition request from the United States.
In the Trump administration, Keith Krach, a former undersecretary of state, recounted how Washington was "hitting the panic button."
He recalls questioning ministers from Europe about their interactions with China. "And they’d say, ‘Well, they’re an important trading partner’ and all that. And then they looked at both sides of the room, there’s nobody in the room, and whispered to me: ‘But we don’t trust them."
The company gave top operators in the Western world six-figure pay to help them manage the geopolitical maelstrom. According to numerous people who got similar offers, it put together a top-notch team of former Western journalists and politicians with access to Westminster and the Elysée.
The gambit first appeared to succeed.
In countries like Germany, where Trump served as an effective counterbalance, Huawei's message—that the U.S. itself posed surveillance dangers and that Washington's antagonism was motivated by business interests—gained momentum.
The argument Trump made, according to Thorsten Benner, head of the Global Public Policy Institute in Berlin, "was almost more counterproductive." Big telco companies also backed Huawei because they saw the importance of the affordable equipment and attentive customer service.
Beginning in 2020, Huawei appeared to have resisted American proposals for outright restrictions. At that time, the U.K. Boris Johnson, the prime minister, authorized the business to develop a portion of the nation's 5G infrastructure. A day later, the European Union unveiled a strategy to reduce its reliance on Chinese suppliers, but left Huawei free to urge national governments to maintain market access for its products.
The pandemic followed. Trump stepped up his anti-China campaign in May 2020 with new sanctions against Huawei that essentially cut off their supply of semiconductors as the coronavirus, which originated in Wuhan, was responsible for hundreds of deaths.
Even though the government predicted the decision would delay the introduction of the technology and add half a billion pounds in expenditures, the U.K.'s Johnson entirely changed course by July and declared all Huawei equipment would have to be removed from British 5G networks.
The governments of several European nations, including France, Sweden, Romania, the Baltic states, Belgium, and Denmark, either prohibited Huawei equipment in critical areas of their 5G networks or mandated that their operators wean themselves off of it over the course of 2020 and 2021.
Meanwhile, U.S. sanctions that prevented Huawei's devices from accessing Android, the Google-owned operating system, destroyed the company's smartphone business, which was previously on track to compete with Apple and Samsung in Europe.
Although unpleasant, these setbacks were not yet seen as lethal. Trump's defeat in the election and the decline of the pandemic in Europe appeared to present a chance for a counterattack.
Beginning in 2021, Huawei's lobbyists in Brussels were still confident that Europe's need for quick, inexpensive 5G installation would triumph over security worries. Even sessions in the European Parliament were scheduled to present their case.
On February 24, the day Putin began his full-scale invasion of Ukraine, those meetings were called off. The risk-benefit analysis involving Huawei has abruptly changed for many people in Europe.
The fact that we are dependent on Russian gas, particularly in Germany, brought about the biggest change, according to John Strand, a telecoms analyst who has been monitoring Huawei's market impact in Europe for the past few years. "It begs the question: What’s worse, being dependent on Russian gas or on Chinese telecoms infrastructure?"
President Joe Biden only intensified the pressure on Huawei, and now a more sympathetic messenger is delivering Washington's warnings. The U.K. and the European Commission both issued fresh warnings in October against using Huawei technology to power 5G networks. The government reiterated its demand that Huawei equipment be removed from the British telecoms infrastructure.
The company's struggles have eaten away at its market share and taken the legs out from under its lobbying efforts.
Prior to the pandemic, the organization frequently received European politicians, journalists, and business figures at its Shenzhen headquarters, a sizable site with facilities that showcased its goal to be a worldwide player.
The zero-COVID policy in China prevented that.
At the yearly Mobile World Congress, the main exhibition for the global telecoms sector, held in Barcelona, the business was for many years the biggest spender. The company's physical presence this year was a poor replica of earlier ones, which it used to introduce new items with fanfare and enormous marketing dollars.
The World Economic Forum in Davos, which had included Huawei among its primary sponsors, may be the most high-profile event that best exemplifies the degree of the turnaround. On January 21, 2020, a week before Johnson decided to support Huawei against Trump, Ren was on stage at the ski resort speaking with "Sapiens" author Yuval Noah Harari about the potential of AI.
The pandemic forced the cancellation of the annual meeting of financial and political titans in Davos the following year. Huawei's top executives missed the conversation when it was rescheduled for the summer of 2022. They were not permitted to leave China due to Beijing's zero-COVID policy.
Industry observers claim that the company still maintains a significant market share in a few important national markets, like Germany and Spain.
More over half of the 4G radio access network equipment (RAN) in 15 out of the 31 nations evaluated in a 2020 report by Strand Consult, which is still the most thorough public review of Huawei's footprint in Europe, came from Chinese manufacturers.
However, authorities have imposed regulations in many of these markets that will force operators to phase out or at the very least significantly reduce their use of "high-risk vendors" in the upcoming years. These "high-risk vendors" are generally understood to be state-affiliated Huawei and the Chinese telecom company ZTE.
They are starting to bite now.
In the early 5G rollout competition, Huawei outperformed its competitors in Europe. However, according to confidential data compiled by boutique telecoms research firm Dell'Oro and shared with POLITICO by an industry official, Sweden's Ericsson surpassed Huawei in market share of new European sales of radio access networks as of early last year, just as European officials were changing their stance on 5G security. Base stations and antennas are part of radio access networks, which account for the majority of network investment.
The most recent report, from the second quarter of 2022, put Finnish Nokia at 27%, Ericsson at 41%, and Huawei at 28%. This comprises brand-new base station and antenna sales for 3G, 4G, and 5G, some of which are related to ongoing operator contracts.
The change is even more noticeable for 5G RAN: According to Dell'Oro, Huawei currently only accounts for 22 percent of sales in Europe, while Ericsson accounts for 42 percent and Nokia for 32 percent. Huawei had previously held the market leadership position at the beginning of the rollout.
According to industry observers, Huawei's decision to combine and eliminate significant public affairs responsibilities might affect the company in nations where it still has a stake in the outcome, namely Germany, Italy, and Spain. Governments have been sluggish to put restrictions on "high-risk vendors" in these sizable European marketplaces, and they have been especially slow and lax in enforcing them.
The top operators in Europe, including Deutsche Telekom and Vodafone, have active contracts with Huawei, indicating that the Chinese company is at least still maintaining networks and keeping them operational, and possibly even continuing to help some aspects of the 5G deployment.
However, Olaf Scholz's new administration in Germany has adopted a more critical approach toward Chinese technology. Chinese investors were explicitly prohibited from purchasing a German chip plant earlier this month due to potential security risks, according to Economy Minister Robert Habeck, who has adopted a harsh stance toward China.
Of fact, Huawei has not given up on Europe entirely.
Those who continued to meet with the company this summer in Brussels were given a substantial goodie bag.
The bag featured a memoir by Frédéric Pierucci in addition to beautiful hardcover books from the company's PR department with titles like "Choose a Smarter Future: A contribution to Europe's next digital policy" and "Ten Years of Connecting Europe." Pierucci, a former executive of the French infrastructure maker Alstom, was detained by the FBI in 2013 on suspicion of bribery just as General Electric, an American conglomerate, was in talks to acquire Alstom's nuclear division.
The author of the book "The American Trap" contends that he was held hostage in Washington's covert economic campaign against its friends.
According to the publisher's summary, "One after the other, some of the world’s largest companies are being actively destabilized to the benefit of the U.S., in acts of economic sabotage that seem to be the beginning of what’s to come..."
It is a story with strong appeal within the organization and one that naturally connects with other nations who perceive themselves as opposing liberal superpowers. Hungary, which is increasingly at odds with the rest of the EU on how to deal with China and Russia, is a vociferous ally that Huawei is leaning towards as it looks for allies on the Continent.
The largest European logistics hub of the corporation, Hungary, hosted this year's annual Innovation Day event in September on behalf of Huawei's CEE & Nordic area.
At Budapest's cupola-topped Castle Garden Bazaar, tech entrepreneurs networked over made-to-order coffee and copious canapés while speaking in a mix of English, Hungarian, Chinese, and German.
Mini-documentaries about safeguarding regional salmon breeds in Norway and preventing floods in Hungary were screened inside the conference room by bilingual hosts. Small business executives highlighted drones that are using Huawei 5G networks to monitor crops in Austria and potential forest fires in Greece.
Huawei presented research it commissioned from the Economist Intelligence Unit reinforcing Europe's laggard status on 5G use and implementation, with simultaneous translation available in Hungarian. It was a subliminal warning that destroying Huawei's infrastructure would have serious repercussions.
However, the business also highlighted goods that are less likely to raise security issues, such as solar panel inverters, that it believes will make up a larger portion of its portfolio.
In a video message to the Budapest audience, Jeff Wang, the company's current head of public affairs and communications, stated, "Huawei is committed to the vision of a green Europe." He also mentioned the 10 years he spent working on the Continent.
Officials from Huawei pushed to have Prime Minister Viktor Orbán speak for weeks before the event. While that did not work out, Orbán sent Péter Szijjártó, minister of foreign affairs and trade, as one of his top lieutenants, to deliver a message.
Szijjártó declared, "We are not going to discriminate [against] any investing company because of their country of origin." He continued by saying that Budapest would resist "international pressure" to prevent "the presence of Huawei here in Hungary."
The decision to double down in Hungary, according to Radoslaw Kedzia, Huawei's vice president for the CEE & Nordic area (and the first non-Chinese to hold the position of CEO within the firm, in the Czech Republic in 2015).
"Let’s not demonize us, OK? We are like any other company," Kedzia remarked.
It is wise to focus some of your resources in a certain nation, he continued, if a business assessment shows "prospect of the next 10–20 years of stable operation."
Huawei engages with every nation in the "same way, on the same level," the European representative emphasized, adding that the business focuses on technology and "does not engage" in "political games."
There is no doubt that Huawei has lost the big European game, which has sent all of its political players home.
By fLEXI tEAM