Huawei addressed accusations it had misrepresented its ownership structure and, due to the way trade unions in China operate, is effectively state-owned.
In a press briefing, Jiang Xisheng, chief secretary of Huawei’s board of directors, addressed a number of recent claims, but his attempt to add clarity to an extremely complicated corporate structure and any connections, either direct or indirect, to the central government seemed to raise even more questions.
He began by reiterating Huawei is 100 per cent owned by a holding company, which is 99 per cent held by a trade union committee. Huawei founder and CEO Ren Zhengfei has about a 1 per cent interest. Jiang stated no government agency or outside organisation holds shares or has any control over the company.
“There is no government capital in Huawei,” he said.
In a report published in mid-April, two US-based university professors questioned the company’s long-standing claim it is wholly employee owned.
Completely separate
Jiang explained the company’s trade union was established and operates in accordance with the country’s laws, as does an employee shareholding scheme implemented through the body.
The operations of the trade union and employee share programme are completely separate and independent from each other, he insisted.
But, he later acknowledged in a Q&A there is a connection between Huawei’s trade union committee (its governance organisation) and the government’s trade union body.
Adding to the confusion, the trade union also has a representatives’ commission through which it “fulfills shareholder responsibilities and exercises shareholder rights”. It is the company’s highest decision-making entity, electing members of the board of directors and supervisory board.
The trade union’s role, it seems, is not the same as those in western countries and is more of a rubber stamp on the commission’s decisions.
Founder veto
Responding to reports Ren has veto power which can override decisions made by directors of Huawei or its holding company, Jiang said that while the founder “can veto certain important matters, he has no authority to make decisions on important matters. He influences the company not by exercising his veto authority, but by communicating his ideas and sharing his philosophies”.
In mid-January Ren, in a rare media appearance, addressed growing scrutiny of Huawei’s security [1], declaring the company has never received a request from China’s government to turn over a customer’s data and is not required to maintain a backdoor in its equipment.
The ownership briefing comes a day after the UK government cleared the vendor [2] to participate in parts of 5G rollouts.
[1] https://www.mobileworldlive.com/featured-content/home-banner/huawei-founder-steps-into-security-storm/[2] https://www.mobileworldlive.com/featured-content/home-banner/uk-gives-huawei-5g-nod/
