Huawei’s CEO has a message for Canada: Join us and prosper in the 5G future

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Fourteen months before his daughter was arrested at the airport in Vancouver, one of China’s most prominent billionaires came to Canada.

Ren Zhengfei came looking for smart people and places to spend money, criss-crossing the country with stops in Montreal, Ottawa and Toronto before boarding the Rocky Mountaineer from Banff to Kamloops, then on to Vancouver.

“It was a 10-plus day trip from east to west,” he told The Globe and Mail this week in a wide-ranging discussion at the company’s headquarters in Shenzhen, part of a concerted effort to use his own genial personality to assuage fears that his company is an untrustworthy threat, an agent of an authoritarian regime seeking to disrupt the global order.

The Canadian excursion, though, hearkened back to the days, decades earlier, when Mr. Ren piled executives into a van and roamed the United States, hoping to glean secrets of American innovation that would help propel Huawei Technologies Co. Ltd., the company he founded, into a globe-spanning giant of technology.

This time, though, he was driven by visions of Canada as a new foundation for Huawei’s future.

He liked what he saw: a country with an American standard of living but a more open immigration policy. He was impressed by the Canadian universities he visited and the people he met, including two researchers he calls fathers of artificial intelligence.

Today he is critical of Canada, saying a smarter country would have ignored the U.S. request to extradite his daughter, Huawei chief financial officer Meng Wanzhou.

But in 2017 he left Canada determined to spend billions of dollars and hire thousands of people. “I’ve already told the head of our local management team in Canada that we will buy a lot of land in places like Toronto, Ottawa, Montreal and Vancouver, and use that land to build new research and development centres,” he told The Globe, revealing the outlines of a plan to broaden Huawei’s imprint on Canadian soil, where it already employs about a thousand people.

Canada stands to “become Huawei’s global centre for theoretical research,” he said, recruiting scientists from around the world to puzzle through the complex questions that may define which technology companies stand and fall for years to come.

”Over the next several decades,” Mr. Ren said, “I think the biggest revolution for humanity will come from artificial intelligence and bioscience.”

He was speaking almost seven months after Ms. Meng’s arrest, an act of law enforcement that precipitated a political, economic and human crisis rarely matched in recent Canadian history.

Ms. Meng has been charged in the United States with bank fraud, wire fraud and conspiracies to commit bank and wire fraud. But as she awaits an extradition hearing in Vancouver, it is Canada that has borne the brunt of Chinese anger.

China has taken prisoner two Canadian citizens and inflicted deepening economic pain – blocking imports of Canadian canola and meat. In Ottawa, political infighting has renewed questions about the basic fabric of the country – and the values that underpin Canada.

Mr. Ren says he is determined to build new research and development centres in Canada all the same – though he admits the project’s pace has slowed – making even more acute the questions for Canadian leaders as they contemplate what role to allow Huawei to play in the country, especially in the building of 5G mobile network technology.

The land has yet to be bought. But for Huawei, “our strategy to continue to develop and invest in Canada remains unchanged,” Mr. Ren said.

That is, if it’s welcome.

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Few people occupy a more central role in the continuing crisis than Mr. Ren, who stewarded Huawei into a Chinese-headquartered colossus that has come to represent China’s fast-changing place in the world, as well as the fears – of espionage, of intellectual-property theft, of a new authoritarian regime building digital tools that can challenge Western liberalism – that accompany it.

Mr. Ren was once a mysterious figure, a Communist Party member and former People’s Liberation Army technologist who gained fame as an entrepreneur but shunned the public spotlight, describing himself as shy.

But in the months since Ms. Meng’s arrest, he has taken on a far more visible presence. He is folksy and warm in person, choosing his words deliberately and peppering them with so many idioms that his interpreters come prepared with a full page of translations. Occasionally bursting into laughter, he is an unintimidating presence at odds with the image of Huawei as a predatory tool of the Chinese government.

Though he is careful to speak on behalf of himself and his company alone, he is often seen as giving voice to a rising superpower as it confronts a sometimes unreceptive outside world.

In an interview that spanned almost two hours, Mr. Ren, 75, sharply rebuked Canada’s leaders, saying it had been foolish not to rebuff the U.S. request to extradite Ms. Meng. “Maybe some other countries are smarter in rejecting U.S. extradition requests,” he said.

Mr. Ren, who only learned of his daughter’s arrest two days after it took place, urged Canada’s Justice Minister, David Lametti, to use his power to intervene and free Ms. Meng.

Canadian Foreign Affairs Minister Chrystia Freeland has rejected the idea. But failing to do so, Mr. Ren said, would send the message that Canada is subservient to the United States, and “Canada’s image might be harmed.”

But he did side with Ottawa on one matter: China and Canada should be talking. “Dialogue is important,” he said. Beijing has ignored numerous requests to speak with Canadian leaders since Ms. Meng’s arrest.

He also offered Huawei’s help, of a sort, in seeking the release of Michael Kovrig and Michael Spavor, the former diplomat and the entrepreneur arrested for allegedly stealing Chinese state secrets, in what is widely seen as retribution and a form of “hostage diplomacy.” If Canada is prepared to initiate an exchange – freeing Ms. Meng – “we will start our part of the work,” Mr. Ren said, suggesting Huawei might then advocate for the release of the two Canadians.

But, he said, in a reference to Ottawa, “I don’t think you are prepared for such an exchange.”

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Mr. Ren spoke from the marbled interior of a newly opened client-reception building on Huawei’s main campus in Shenzhen, a three-storey building filled with hand-painted reproductions of historic Russian paintings, window panes fashioned into the shape of the Huawei logo and rooms designed to mimic Japanese tea houses and an Italian café. Outside, water burbles down an artificial river next to grass manicured to a putting-green standard, a peaceful idyll.

It’s a rare bit of serenity in a company known for its punishing 996 work culture, which has many employees working 9 a.m. to 9 p.m., six days a week. A “cot culture” of sleeping in the office dates to the company’s earliest days, as does a militaristic ethos espoused by Mr. Ren.

Finding itself at war with the United States has only strengthened that resolve, and Mr. Ren has taken on the air of a greying general whose grandfatherly mien has done nothing to dull his readiness for a fight. Indeed, age seems only to have strengthened his resolve, as he described an intense effort to vanquish what is almost certainly the greatest foe he has ever faced, the might of the U.S. government, which in mid-May placed Huawei on the Entity List, a blacklist that bars the company from acquiring U.S. technology or parts without specific permission.

The list has been dubbed the “death penalty” for any corporation, and last week Mr. Ren warned that being blacklisted by the United States could slash the company’s revenue by US$30-billion this year.

Now, however, he says that estimate is already too pessimistic.

“This was our initial projection, but the actual numbers in our financial statements were a little higher than expected,” he said.

In what has now become a famous piece of modern soothsaying, Mr. Ren has long devoted engineers and programmers to a Plan B, tasking them with building their own technology and software in case of an unforeseen disruption.

“We have long been prepared,” he said.

Huawei currently sits in a sort of blacklist purgatory. Days after adding the company to the Entity List, the Trump administration granted it a 90-day reprieve, and many of its suppliers have applied for exemptions that would allow them to continue working with the Chinese firm.

Yet Mr. Ren has little hope. “I don’t think the U.S. will remove us from the Entity List,” he said. “They have added Huawei to the list not because we have done something wrong and need to be punished, but because they want to wipe us out. If someone wants to condemn you, they can always trump up a charge.”

And Huawei has no shortage of problems to confront as it tries to shake its reliance on the United States. The biggest problems, Mr. Ren said, lie in unexpected areas. “If some small, apparently minor component is missing on your circuit board, you may have to redesign the entire board,” he said. “And that involves quite a workload.”

Problems are likely to emerge, including shortages of some products. The next year and a half won’t be easy for a company that has relied heavily on the U.S. from its earliest days. When Mr. Ren first travelled to the United States in 1992 with a small group of executives, he visited the headquarters of Texas Instruments as well as Silicon Valley, which stirred in him an intoxicating ambition: to catch up with the U.S. More than a third of the companies Huawei listed last year as core suppliers are American. Staff say Mr. Ren’s favoured coffee brew remains the Americano – or, as it is rendered into Mandarin, “American style.”

“We never want to live without U.S. technology or the support provided by their products and components,” he said.

But when it comes to turning his back on the country that once inspired him, he intimates that he no longer feels he has a choice.

While his own beverage tastes are unlikely to change, the internal directive to Huawei workers is clear: Strip out anything from the U.S. across the company’s sprawling product lines.

Within two years, Mr. Ren said, “we will no longer face a threat to our survival.”

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It may be bluster. Mr. Ren’s ambition to overtake the United States has landed his company on death’s doorstep before. Upon his return from his U.S. road trip in 1992, he began spending heavily to gain an edge on U.S. rivals. The following year, amid a national lending crackdown, a series of banks froze out Huawei, and the company ran into cash-flow trouble. Mr. Ren brought in government-backed funding at punishing 33-per-cent repayment rates.

It took years for Huawei to return to health.

But in the decades since, it has grown into a far more potent entity.

Its current payroll includes more than 80,000 people in research and development roles, and the company has grown by 6,000 people this year as it works to weed out U.S. technology. With that much talent at his disposal, Mr. Ren does not see “the U.S. posing a substantial risk that threatens Huawei.”

One of his primary tasks, however, remains convincing the rest of the world that Huawei is not a threat. The company has been placed under intense global scrutiny, accused by Western scholars and politicians of running a Potemkin employee ownership scheme and labelled a security threat by those who doubt that any company in China could grow to Huawei’s size and stature without the ministrations, if not the outright control, of the Chinese state. The company has denied all of the allegations against it, claiming – improbably, observers say – that it would reject government demands to spy on its overseas customers.

Yet questions continue to mount. This week, a Bloomberg report uncovered 10 academic articles co-authored by Huawei employees and Chinese military researchers, a seeming contradiction of earlier assurances from Mr. Ren that Huawei does no such joint research.

“Huawei was not aware of the behaviour of these several individuals in their individual capacity. We have no idea why they did this,” he told The Globe. Only one of the employees in question continues to work for the company, in an entry-level position, he said. He accused his employees of co-operating with the military “to hog the limelight. He must think that people would pay attention to him. It’s like being an internet celebrity.”

Only after several questions did he say that such co-operation was “not allowed” at Huawei.

The company has also rejected repeated allegations that its success is built on stolen technology. On Thursday, chief legal officer Song Liuping said that “in the past 30 years, no court has ever concluded that Huawei engaged in malicious intellectual-property theft. And we have never been required by the court to pay damages for this.”

Those words, however, were carefully chosen: Courts have on multiple occasions found that Huawei breached contracts and misappropriated and stole trade secrets – the most recent such ruling came this week – and the company has been ordered to pay millions of dollars in damages, although not for theft considered “malicious.”

Now, however, the company is striking out on a new effort to depict others as intellectual-property scofflaws as well. Huawei has demanded US$1-billion in payments for five years of unpaid patent licensing fees from Verizon Communications Inc., Mr. Ren said, and “extra money will be charged for 5G.” Verizon is unlikely to be the only company to receive such a demand. Huawei is striking out on a worldwide effort to collect money it feels it is owed. “Companies who may not have a big patent portfolio may have to pay more in the future,” Mr. Ren said.

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But to those who co-operate with Huawei, he pledges benefits. Indeed, when it comes to Canada, he offers a pitch that would not sound out of place in a stump speech, were any politician willing to make Huawei a centrepiece of future plans.

He starts from history: Europe industrialized more quickly than China, he said, in part because its infrastructure ran faster. In an era when Europe had trains, China still used horse-drawn carriages. “Speed is very important to the development of a society,” he said, arguing that the same is true for information.

“5G is a very high-speed product that will play a very important role in boosting the development of culture, education and the economy,” he said.

The U.S., for its part, “can’t set up an advanced information system," he said, “because we will not be selling our products in the United States.”

He suggests Ottawa has a chance to link arms with Huawei to leapfrog Washington – to transformational effect. “The biggest weakness for Canada is that while you have very bright people, you don’t have enough people,” he said. But high-speed networks can enable a broader deployment of artificial intelligence of the sort that, the optimists believe, can expand human productivity tenfold.

Do that, Mr. Ren suggested, and Canada “will become an industrial power with an equivalent population of 300 million.” Install 5G, in other words – and Mr. Ren has his own system to sell – and “it’s very likely investors from other parts of the world would swarm to Canada.”

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