To understand China’s distant past, Sean Yang suggests you visit his hometown of Xian, where an army of ancient terracotta warriors was unearthed in the 1970s.
For insight into the world-altering changes of China’s past 30 years, he suggests you stop by the vibrant city of Shenzhen, the country’s first and most successful “special economic zone,” where China’s leaders first started experimenting with the free-market measures that kick-started China’s export-oriented economy – and led to China’s rise.
For a glimpse into the future of the world’s second-largest economy, it’s worth a trip to the sprawling global headquarters of Mr. Yang’s powerful employer, Huawei Technologies Co. Ltd., a massive Chinese telecommunications company that hauled in $32-billion (U.S.) in revenue last year and now has more than 140,000 employees around the world.
One of China’s only non-state-owned multinational success stories, Shenzen-based Huawei has upended the existing order of old-world telecommunications equipment makers such as Ericsson. But as the company continues to find success in a startlingly broad range of industries from network equipment and surveillance to smartphones and tablets, Mr. Yang and the company’s other overseas emissaries are frequently forced to grapple with intense suspicion from the West over Huawei’s rise.
In many ways, Mr. Yang personifies Huawei’s ascent from rural China to contracts with Bell Canada and in red-hot global telecom markets such as India. But he is also a helpful guide to the dim sum menu at the Shangri-la Banquet Hall in Markham, Ont., near Huawei Canada’s headquarters. He changed the venue at the last minute, deeming this restaurant the best place for dim sum in Markham, which many of Toronto’s Chinese residents, including Mr. Yang, call home (his wife and two children still live in China).
Together, we select shrimp and mushroom dumplings, a curried soup of fish balls, congee, bean-curd-skin rolls and a vegetable dish. “I was even invited to make a video for Markham, and to recommend Markham as the best place to invest,” says Mr. Yang, who is Huawei’s president in Canada, where the firm has more than 400 employees. “I said, ‘Welcome to Markham, because they have the best Chinese food!’ ”
But even as he rolls out the welcome mat for Markham – and much of the world, including Canada, does the same for Huawei – Mr. Yang and his company have been forced to deal with seemingly unending setbacks in the United States.
There, in one of the world’s most valuable telecom markets, lawmakers concerned about economic espionage and cybersecurity have repeatedly tarred Huawei as a Chinese Trojan horse that imperils U.S. interests – derailing attempted acquisitions and making big American wireless companies some of the only private sector actors around the globe hesitant to work with Huawei. (About 45 of the world’s 50 biggest carriers do business with Huawei, but Australia and Canada have both barred the company from bidding on certain government projects considered critical infrastructure.)
Some suspicion is unsurprising, perhaps, for a company whose founder was an engineer in the People’s Liberation Army. But in early October, the United States made plain its distrust: A report by two senior members of the powerful U.S. House Permanent Select Committee on Intelligence said that Huawei – as well as ZTE Corp., another Chinese telecom – represented a serious risk to U.S. national security. The intelligence community “must remain vigilant and focused on this threat,” the report says.
The panel behind the 11-month probe said it received “multiple, credible reports” from former and current Huawei employees about several potential violations by company officials, including alleged “immigration violations, bribery and corruption” – and recommended the company’s products be excluded from U.S. government computer systems.
There has always been a certain amount of mystery around Huawei, one of the very few private companies to find global success in the land of state-owned enterprises. We speak about the report several times over the course of a lunch that lasts more nearly two hours.
“This is a perception of the Cold War,” he says quietly, gearing up for a rant. “They’re always thinking people have opposition to the United States. They don’t trust that China will be a peaceful force in the global economy. … We’re a subsidiary company following Canadian law. We’re a subsidiary company following American law. We’re a subsidiary following German, French [laws] – every country! We have more than 140 companies. We’re following local regulations. Just like what people are doing in China. Same. Do you think we would risk a $32-billion company to do this [supply intelligence to China]? That’s worse. I think that would be crazy.”
Mr. Yang has a point of sorts. Huawei is patient, calculating and unquestionably successful: Contract by gritty contract, it has made huge gains against most of its old-world rivals. Mr. Yang himself is an example of the company’s gradual, global rise: He started in rural Chinese markets, rose to work in various post-Soviet ‘stans and was then transferred to Latin America. After a stint in India and at Huawei’s Shenzhen headquarters, he was transferred to the United States, and then to Toronto in 2008.
Former top Canadian Security Intelligence Service officials, as well as the national surveillance and cryptology agency, the Communications Security Establishment, have warned against giving Huawei a foothold in the government and military. But China’s ambassador to Canada has said critics should provide evidence of spying or “shut up.” Mr. Yang, who is soft-spoken but assertive, says U.S. suspicion amounts to “protectionism.”
“If people have these kind of concerns – Cisco, Ericsson, Nokia, Motorola, they all have huge facilities in China,” Mr. Yang says. “If you think Huawei can do some bad things, have you thought about all of that – that Cisco also has risk? Did you test, did you verify the Cisco gear? Do they have intention to do bad things? Does that mean Cisco also has intentions to do bad things to China? I don’t think so.”
Of course, intelligence agencies worry about even the slightest risk. The complexity of telecom equipment means it could take a long time to ensure it has not been compromised, and even then examiners might not be 100 per cent sure, says Cedric Jeannot, founder of I Think Security, a Canadian firm that sells military-grade encryption tools. “If there’s a war, the Western countries don’t know if [Huawei] will keep the independence of the business,” he says. If you’re Ecuador, he adds as an example, you may lack the technology and need to buy it off the shelf from China. If you’re the U.S., he asks, why take the risk – even if it’s a remote one?
Huawei’s success in developing markets also makes a lot of people uneasy. In trips to India and Nigeria, I’ve heard from politicians worried about Huawei’s motives and businessmen frustrated by what they say are underhanded tactics. Most recently, in West Africa, various telecom executives said Huawei was offering potential big-contract customers five years to pay, a tactic few public company rivals could counter (and which Huawei’s local executive dismissed as rumour).
Mr. Yang comes across as more diplomatic than this, and gives me Henry Kissinger’s book On Chin a as if to prove it. In conversation, Mr. Yang praises the ingenuity of Nortel Network’s engineers, which he delighted in hiring after the storied firm’s collapse. Despite the fact that his family, including two boys, remains in China, he has bought a house here in Markham and says he dreams of opening Huawei research and development facilities across the country, from Montreal to Vancouver. This type of Chinese investment in Canada is uncontroversial, but I ask Mr. Yang about other Chinese investment, such as the state-owned China National Offshore Oil Corp. Ltd.’s recent $15-billion bid for Nexen (which was under review when we spoke but has since been approved by Ottawa).
Mr. Yang, who is also vice-chairman of the Canada China Chamber of Commerce, answers with a sort of Chinese proverb. Lord Ye, Mr. Yang explains, was so fond of dragons that he decorated everything in his house, from the walls to the doors and windows, with dragon designs. One day, an actual dragon heard of Lord Ye’s obsession, and visited him – whereupon the man fled. Lord Ye in this tale is the Canadian government, with the dragon being Chinese investment. “This is a story [about how] he really wants it, but once the thing comes in front of you, you’re scared,” Mr. Yang says. Referring to Ottawa, he adds: “They didn’t have a clear strategy.”
Since that time of indecision, the Canadian government has firmed up its strategy with regard to state-owned companies. And Huawei, which is officially not state-owned despite the insinuations of U.S. lawmakers, continues to press ahead with expansion in Canada. Mr. Yang says he wants to open a facility in Waterloo, Ont., home to Research In Motion Ltd., a Canadian technology firm whose troubles over the past year have brought about less-flattering references to Nortel than Mr. Yang’s.
Lunch ends and we walk out to the parking lot. He asks me what I think of Waterloo, where I have had an office over the past year. I then ask what he thinks of BlackBerry maker RIM, which may be a future neighbour.
“We have our fingers crossed for them,” he says, as he climbs into a chauffeured black Cadillac Escalade.
Attended Peking University from 1991 to 1996, where he earned a bachelor of science degree with a major in electronics and information systems.
Started working for Huawei selling wireless networks in rural China. In his first decade with the company, he worked his way up through increasingly senior technical positions.
2006: Promoted to head of sales in the United States – a shift to the business side of the company.
2010: Appointed president of Huawei Canada.
Likes to read, prefering books on history, politics and business.
Though his favourite sport is badminton, he says: “Once I can figure out the rules and how to follow the puck, hockey will be a close second.”Report Typo/Error
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