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Huawei reports record profits despite U.S. pressure campaign

Huawei reports record profits despite U.S. pressure campaign
Business
BEIJING— Huawei’s profits rose by 25 per cent to a record $8.8 billion (U.S.) last year, it announced Friday, suggesting that the United States’ global campaign against the Chinese technology titan has had no discernible impact on its bottom line.

Reveling in its strong financial results, Huawei’s leaders said that the Trump administration was targeting the company for political and anti-competitive reasons.

Despite the United States’ campaign against Huawei, the technology titan said profits rose by 25 per cent to a record $8.8 billion (U.S.) last year.  (Kin Cheung / AP)

“The U.S. government has got a loser’s attitude,” Guo Ping, the current chairman of Huawei, told reporters while releasing the results. “They want to smear Huawei because they can’t compete with us.”

The Trump administration had “abandoned all table manners” in the way it deals with the rise of Huawei, Guo said, adding that he hoped the administration “will adjust its mentality.”

American officials fear that Huawei, which is vying to become the global leader for next generation 5G mobile networks, has close links to the Communist Party and the military in China, and that it might be able to use its networks to spy and conduct cyberattacks.

Huawei announced its results a day after the British equivalent to the U.S. National Security Agency released a scathing assessment of the security risks the Chinese company posed to Britain’s telecom networks.

Huawei’s CFO had a penchant for rival Apple products, it seems

The Government Communications Headquarters Bureau said it can provide “only limited assurance” that the long-term national security risks can be managed in Huawei equipment deployed in Britain, and that “it will be difficult” to manage the risk of future products until current defects are fixed.

Huawei, the world’s largest maker of telecommunications equipment, strongly denies the accusations that its equipment could be used for spying.

In an opinion piece for the Financial Times last month, Guo said that the United States was so opposed to Huawei because the more of its equipment was installed around the world, the more it “hampers U.S. efforts to spy on whomever it wants.” He cited revelations from Edward Snowden about how the U.S. monitors electronic communications.

Over the past year, the Trump administration has embarked on a campaign to convince governments around the world to ban Huawei from its networks.

In the United States, the government has already prohibited federal agencies and contractors from buying Huawei equipment, citing national security concerns. Huawei announced earlier this month that it would sue the government, saying it had been denied due process and that there is no evidence to support the government’s espionage claims.

U.S. authorities have launched other legal broadsides against the Shenzhen-based giant. Huawei’s chief financial officer and daughter of the company’s founder, Meng Wanzhou, is currently under house arrest in Canada while she fights extradition to the United States on charges that Huawei breached American export sanctions against Iran.

The actions widely seen here as part of a broader effort — which also encompasses the United States’ trade war against China — to stymie China’s rise in the global economy and stop it from challenging American supremacy.

“The U.S. government is using FUD because of its worldwide hegemony,” said Fang Xingdong, director of the Center for Internet and Society at Zhejiang University of Media and Communications, using an acronym for “fear, uncertainty and doubt.”

“Although it may violate law and ethics, Washington only needs to pay a little to win its interests,” he wrote in the Global Times, a nationalist newspaper that often reflects the foreign policy of the ruling Communist Party. “This is the driving force behind U.S. suppression of Huawei.”

Huawei’s results show the company remains in good financial health. Its sales rose 20 per cent from the previous year to exceed $107 billion, another record, in 2018.

The bulk of the improvement came from a sharp increase in smartphones. Huawei shipped 206 million smartphones in 2018, and sales were up 45 per cent compared with the previous year.

Sales from its 5G networking division fell slightly, by 1.3 per cent, but analysts said they would likely pick up as Huawei begins to roll out its 5G networks. More than 30 countries have awarded Huawei contracts to build its next generation infrastructure.

The company is privately owned so is not required to release financial results, but has taken to offering an annual report containing some headline numbers.

The U.S. actions against Huawei might actually have helped it by giving the tech giant free advertising, said Ni Feng, deputy director of American studies at of the Chinese Academy of Social Sciences.

“It’s like, ‘See, the Americans are afraid, does that mean its technology is indeed awesome,’” Ni said.

Chinese people had reacted emotionally to the American “bullying” of Huawei, Ni said. “They are more willing to buy Huawei products,” he said.

After Meng was arrested in Canada last year at the U.S.’s request, some Chinese companies began a campaign to encourage employees to buy Huawei phones rather than iPhones, while some even said they would fine staff who had an iPhone.
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