"5G is a kind of nuclear bomb for the US"

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ShenzhenFor months top politicians around the world have been discussing the use of Chinese telecommunications technology – and its risks. Now Huawei's founder Ren Zhengfei is the first to speak up and blame the US severely. "Unfortunately, the US sees the 5G technology as a strategic weapon. For them, it's a kind of nuclear bomb, "said Ren Zhengfei in an interview with Handelsblatt and Wirtschaftswoche.

Ren even warned against a "new cold war". Especially the "American trade war" leads to the fact that the world is radicalizing and less balanced. If the West does not want such a conflict, "it has to stay open and accept the rise of other countries," said the head of the Chinese telecommunications company.

At the same time, the Chinese CEO also expressed admiration for the policies of the US president. "Trump is great because he has been cutting tax rates in such a short space of time – and in a democratic country." He hopes that China will also significantly reduce its high tax rates.

Regarding the spy allegations, Ren offered a "no-spy agreement" with the German government to appease Berlin's security concerns. There is also an auction of 5G frequencies in Germany. The EU has recently been open to using Chinese technology to expand the 5G mobile network.

The US in particular had recently called on the Europeans not to involve Huawei. They accuse the company of being able to spy on its telecom products or sabotage networks. Evidence for this is not available yet. Huawei has always rejected the allegations.

Read the entire interview here:

Mr Ren, you recently praised Donald Trump as a big president because of his economic policies. Would not he have to be your biggest enemy?
Companies worldwide are burdened with excessive levies. If this burden is not reduced, companies have no breathing room. President Donald Trump is great because he has pushed through tax cuts in such a short space of time – in a democratic country.

So does Trump even serve as a role model for the world?
Well, his goal should be to attract foreign investment. If he intimidates other countries and foreign companies, they will invest less in the US. His tax cut policy would then be much less effective. In fact, I also hope that China will significantly reduce its high tax rates.

Why right now?
The high tax rates made sense at a time when labor costs were low. But now they have risen. So, if taxes do not go down, I think that would hurt the country's development.

Trump also wants to intimidate Huawei. The US is trying to convince its allies, including Germany, to stop using technology from you, or at least massively tighten security controls. Has the boycott affected your business?
No. In the first quarter of 2019, our revenue grew by 30.6 percent year-on-year and profit by 35.4 percent. I would therefore like to thank those US politicians who have called others to block us all over the world.

Why?
What the US has done does not help them achieve their goals. It leads to the opposite. The current debate is making many think: The US is not afraid of anyone. But why are they afraid of the "little rabbit" Huawei now? So we have to make really good products.

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So, the US is promoting Huawei … Why do you think the US is so against you?
Unfortunately, the US sees the 5G technology as a strategic weapon. For them it is a kind of nuclear bomb. But this is not the case. In my opinion, our technology is more like a tap from which the data packets are put into circulation, ie into the network. Only the 5G faucet is bigger and wider than the 4G faucet.

From your mouth sounds 5G technology harmless …
If the Americans were not so fixated on that, development would not have been so accelerated. To be perfectly honest, before the Americans started making such a noise about the 5G technology, I was worried about their future. Actually, I find that our researchers were too fast and there is no need for many commercial applications.

Do you think that US action against Huawei is politically motivated because Americans fear for their technological supremacy?
Yes, the US does not want to be overtaken. Although the industry we work in is not that important, the US does not want us to outperform US companies. We should be suppressed.

Is Huawei perhaps the most prominent victim of the trade war between the US and China?
I would not say that. After all, we have always had virtually no sales on the US market. The only effect we may see concerns other Western countries that have good relations with the US.

But there is also damage to the reputation, right? After the warning from the US government, confidence in Huawei technology has diminished worldwide.
Our customers, also from the West, have built a lot of trust in us in our 30-year history. This trust will not disappear just because some influential people say something now. While the whole world is paying attention to this issue, we should ask ourselves what Huawei has already contributed to society.

In fact?
First, Huawei has been awarded around 90,000 patents worldwide. These are all new patents that contribute a lot to network technology. Second, not only has Huawei joined three billion people around the world, but it has also enabled new connections from all sorts of industries, including the financial sector. If Huawei disappears, that would be a threat to the whole world.

Donald Trump fears that a new superpower is just emerging with China, which is contesting the USA as the world's number one powerhouse. Is this perhaps more than "just" a trade conflict. Are we threatened with a new cold war?
I have similar concerns. The US trade war makes the world radicalized and less balanced. Some Western countries like to take sides in certain matters. If China and Russia also took a stand, it could actually come to another cold war.

How can this be prevented?
If the West does not want the new cold war, it must remain open and accept the rise of other countries. We should focus again on economic development and create peace. For example, if Europe traded more with other countries, its trading volume could grow by another trillion euros. There would be fewer conflicts. In addition, European countries would also have more revenue that could help them solve some internal problems.

(from right) Sha Hua, Sven Afhüppe, Ren Zhengfei, Beat Balzli, Jörn Petring

The founder of the Chinese telecommunications company Huawei, Ren Zhengfei, fears a "new Cold War".

(Photo: Egill Bjarki for Handelsblatt)

But the US government and the EU accuse China of not being open enough. Many sectors are closed to foreign investors.
China is opening more every day. According to the new law regulating foreign investment, which was passed at the People's Congress this March, German auto and mechanical engineers can now set up their own fully independent companies here. So you can expand your sales market here and reduce your costs. Ultimately, that also brings more prosperity for Germany.

A new cold war would be very bad for the global economy, including companies like Huawei, Daimler, Siemens and others. Are you afraid of a new era of protectionism around the world?
I do not think that this new protectionism will last for a long time. Big Western companies, not us, are the most concerned about protectionism. If Western companies can no longer bring their goods to the 1.3 billion people in China, their earnings and stock prices will suffer and their markets will be hit hard.

Research and innovation could also be affected …
Yes, because many small companies have pioneering inventions and products. If the US does not allow them to sell them to China, they either have to go here or emigrate to Germany, for example. Because no company can survive if it can not sell its products.

A cold war includes intelligence operations. There is a regulation in Chinese law which states that companies must provide assistance when it comes to national security. How do you deal with that?
At the Munich Security Conference, State Councilor Yang Jiechi made it clear that Chinese companies must always abide by the laws and regulations of the country in which they operate. China has no law requiring companies to install "backdoors" or spy on foreign information. Premier Li Keqiang has just repeated that at the annual convention of the People's Congress. Has the Chinese government not made its position clear enough?

The US accuses Huawei of using its technology to help the Chinese government espionage. Have you ever been asked by the Chinese government for a special favor?
Never. We've been trying hard to show who we really are, but the US government does not believe us. Now they have to provide facts and evidence to support their allegations against Huawei.

So you have never installed "backdoors" in your technique?
If Huawei had ever maligned in any country, if we had built a backdoor into our equipment, we would risk our markets in over 170 countries. All our employees could lose their jobs. That would be worse than death for me. So how could I agree to install any backdoors?

Does the US government only tell fairy tales?
Yes, it's just fairy tales.

But it's a fact that your employees stole technology. In 2014, Huawei had to pay a million-dollar fine to T-Mobile, the subsidiary of Deutsche Telekom, because two of its engineers were using the arm of a test robot.
Just as we take the protection of our own intellectual property rights seriously, we fully respect the intellectual property rights of others.

Industrial espionage does not exist?
There have been isolated cases where individual employees have not complied with company policies. Huawei finally has over 180,000 employees. Those who make mistakes are disciplined. Above all, our success is due to our focus on our own research. We are ahead of our competitors. That's why the US is now behind us.

Do you trust US technology companies like Google, Amazon and Facebook when it comes to privacy?
100% security is almost impossible in all technologies. If we were to try to build an information network that protects against all risks, the costs would be enormous. Our networks should protect us only from enemy competitors and malicious attacks. We as Huawei do not have any enemy competitors among Western companies, so we do not protect ourselves from Western companies. Nor do we protect ourselves from the US government, the German government, the Chinese government or any other government. You will not forward any information about us to our competitors.

The lack of confidence in Huawei technology may also be about significant cultural differences. Data protection is a central principle for the people of Europe. In China, that is much less pronounced. So do you understand the concerns of European citizens and politicians?
For sure. Huawei strictly adheres to the General Data Protection Regulation in Europe. But please do not forget: Huawei is just a network equipment supplier. The network operators and Internet service providers are the owners of the network. We build the faucet, others are responsible for the water flow.

Chancellor Angela Merkel has decided against excluding Huawei in Germany. Were there conversations between Huawei or Beijing with the German side?
I think Angela Merkel is great. I do not know what the Chinese government thinks. She does not talk to me about it. Last month, we talked to the German Interior Ministry and said that we would be prepared to sign a no-spy agreement with the German government and promise that Huawei will not put backdoors in the networks. I would also urge the Chinese government to sign a no-spy agreement with Germany, in which Beijing could additionally commit itself to abiding by the EU General Data Protection Regulation.

What do you think is a good solution for Germany?
The European countries certainly do not want their data transmitted to China. They definitely do not want their data transferred to the US. Germany has suggested building networks with devices from multiple providers in different countries. We support this proposal.

Nevertheless, not all people trust you. Because China is not a democracy and market economy like Germany. There are many state-owned companies. How close is Huawei to the government?
I do not know what the Chinese government thinks. She does not tell me anything. Huawei is a private company, follows laws in China and pays taxes to the Chinese government.

They are one of the most famous business leaders in China. There is usually a close relationship between such leaders and the government. When were you last received by President Xi?
That was 2015 in the UK. President Xi visited our UK office, so I accompanied him on this visit.

In an interview with Chinese state television, you said that you recently refused Beijing's invitation to attend the 40th Anniversary Celebration of Reform and Opening. How do you refuse such a thing?
I want to be able to concentrate completely on Huawei. One can refuse such an invitation without further ado, even Beijing is changing and becoming more open.

They say they have no special relationship with the government. But recently, New Zealand has imposed a boycott on Huawei. Shortly thereafter, the Chinese government immediately put pressure on the government there. So is there really no connection?
We will not sell 5G technology to New Zealand and Australia in the future. The Chinese government has failed to understand our intentions and their efforts may be in vain.

Another example: A few weeks ago you sent an invitation to a Huawei event to US journalists. The Chinese Embassy in Washington sent the same invitation to the journalists. Again, it should not connect?
We have published a letter of invitation to the media. Reports that the invitation was distributed through the embassy are wrong.

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At the beginning of the US attacks against Huawei, your daughter Meng Wanzhou was arrested in Canada. She is accused of breaking banking with sanctions against Iran. How do you comment on this case?
I think the US has to provide evidence. If they do not provide sufficient evidence, I have reason to believe that they have been held as a political hostage. I think what really matters in court is facts and evidence.

How often do you talk to your daughter?
We call whenever we want. The Americans who hear our calls are having a hard time. You do not know when we talk on the phone, so you have to be ready and wait a lot.

In response to the US boycott, you have sued the US government. Do you think that you have a chance to win this process?
We still believe in the separation of powers in the US, the independence of the US judiciary, and the strength of the US legal system. We believe that we will win.

And if not?
If Huawei wins the case, it will prove that the US has a great legal system. If Huawei loses the case and the US still does not provide solid evidence of its charges against Huawei, it will prove our innocence.

Are you doing that now to improve your image in the US?
The US is fighting Huawei. We have no plans to gain a large market share there. We have no choice but to defend ourselves in court.

Huawei is a leading technology company. Their philosophy is based on being modest, passionate, hard working and improving every day …
Moment. There are many who toil hard every day, and yet they can not build wealth. I would say that our philosophy is to have direction and value to the customer. Because actually the customer has the money. If we only took it but did not do it, we would be thieves. But customers like to give their money, if you can create more value. That's just a fair exchange.

Huawei creates a lot of value for itself and invests 10 to 15 percent of its annual sales in research and development. What is the next big innovation that Huawei will bring forth?
I think our future innovations will always be geared to connecting people around the world. But it's also important to have the researchers do it. With our latest smartphone, the P30, you can take pictures of objects that are one kilometer away. It even has a night vision function. Of course you can ask yourself if normal users really need it. But that's what our researchers dream of. And we at Huawei understand that.

How important will Artificial Intelligence (AI) be for Huawei in the future?
Very important. But for Germany it will be even more important.

Why?
Because production in Germany is already highly automated and supported by information technologies. I think Germany is well placed to make the transition to Industry 4.0. If artificial intelligence is widespread in Germany, a person can do a job that currently requires ten people. When that becomes reality, the working population will in effect increase from 45 million to 450 million, making Germany an even larger industrial nation.

So German companies should invest more in AI?
Yes. The use of AI does not necessarily mean that AI has to be made in Germany. No matter where the technology comes from, as long as technology can create prosperity for Germany, German companies should work for it. Currently, the US is the strongest in AI. Germany must overcome its labor shortage if it wants to make a leap with its industry.

Are you planning new investments in Germany?
Yes we'll do that. We have set up many research centers in Germany and a factory in Weilheim, Bavaria, to produce high performance equipment. Step by step, we will move our production facilities for top products to Europe. We recently bought 513 acres of land in Cambridge for manufacturing optical chipsets. Some of our 5G Base Station production facilities may be located in Europe.

How important is Germany for Huawei?
Germany is one of our preferred locations. In addition to our investment in Germany, many of the technologies and devices used here in China come from Germany. Our software comes mainly from Siemens and Bosch. The cooperation between Huawei and the camera manufacturer Leica is also a perfect example of our investment in Germany.

May we ask you a personal question? You are now 74 years old. How long are you planning to run Huawei?
That depends on how quickly Google can launch a drug that helps people live forever.

We talked a lot about the trade war, the Cold War, European politics and Chinese politics. Could you imagine switching to politics in the last few years of your career?
I am a businessman and will always be a businessman. I will never have anything to do with politics.

At the moment, according to Huawei, only their own employees own shares in the company. Are you planning to go public one day?
No, not for now. Maybe in 3000 years. So if you are patient enough, then you can buy our stock.

Thanks for the interview, Mr. Ren.

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