Visitors to the Shenzhen headquarters of Huawei — the Chinese company that has been at the centre of the US-China trade war — are struck by the ubiquity of one photograph. It is displayed on the walls of the reception, in the coffee shop and on cardboard prints handed out by Ren Zhengfei, the company's founder and chief executive.
The grainy, black-and-white image shows a second world war Soviet plane that has been so badly damaged by enemy fire that it has gaping holes in its wings and body.
"I felt that it was quite like us. We are riddled with bullets from the US," Ren said. But the former soldier in the People's Liberation Army is not seeking victim status. His affinity with the photo derives from a different reason; in spite of its shot-up state, the plane did not crash and instead managed to fly home.
Huawei is similar, argued the 74-year-old entrepreneur who founded the company with seed capital of just US$5,000 in 1987. It will also manage to "fly home" in spite of all the flak hurled at it by the US administration of President Donald Trump.
At the weekend, Trump called a partial ceasefire in those hostilities telling the G20 meeting in Osaka that US technology companies — banned from supplying Huawei since May — would be given a qualified go-ahead to restart sales of products "where there is no great national emergency problem". This could mean they may be able to supply some of the chips, software and other components critical to the world's largest telecoms equipment company.
Yet the bruising battle between Huawei and Washington — and the distrust it has created — is expected to further reduce the reliance on US suppliers, which analysts say is already a trend within China's tech sector. Trump's weekend comments are unlikely to do much to reverse that, with many in the US believing that his move could undermine national security.
"The US is helping us in a great way by giving us these difficulties. Under external pressure, we have become more united than ever, " Ren said in an interview before the dramatic weekend U-turn. "If we aren't allowed to use US components, we are very confident in our ability to use components made in China and other countries."
In an 80-minute discussion in a cavernous hall adorned by doric pillars and statues of Aphrodite, the Greek goddess of love, Ren touched on a wide range of topics. He spoke of Huawei's links to China's military, allegations that his company has used its networks to engage in espionage and charges that it violated US sanctions by dealing with Iran.
He was more reticent on the detention of his daughter Meng Wanzhou in Canada. And a question on whether he would answer a phone call from Trump — were it to come — led to a flurry of evasive manoeuvres.
Trump, he was sure, was "very busy" and "I don't understand English". Yes, he supposed, interpreters could be found but they "don't know much about politics, while I specialise in electronics".
Another issue, he said, was that Trump was "somebody and I am nobody really". Pressed further, he said that in any case, "I am busy patching up holes [in Huawei's business] and may not have time to talk".
In spite of such reticence it is clear that Trump, more than anyone else, holds Huawei's immediate future in his hands. This reality was underscored when the US president signalled a potential softening of the ban on American companies selling to Huawei.
The blacklisting imposed in May by Washington represented a body blow to China's most prominent technology company. It meant that about 1,200 US suppliers of components and intellectual property to Huawei and its 68 affiliates would have to stop such sales — along with overseas firms that shipped items containing more than 25 per cent US-made content.
Huawei bought US$11 billion in components and services from US suppliers last year out of a total procurement bill of US$70b. Yet in technology terms the disruption would be even greater. As Ren said, if even one out of a thousand key parts is missing, a piece of telecoms equipment will cease to work.
As a result Trump's comments at the G20 were welcome. In an emailed response Ren told the Financial Times: "President Trump's statements are good for American companies. Huawei is also willing to continue to buy products from American companies. But we don't see much impact on what we are currently doing. We will still focus on doing our own job right."
It is this phrase — "doing our own job right" — that is key, analysts say. They believe it amounts to Huawei swapping out reliance on US-made inputs as fast as possible.
"President Trump's softening stance on Huawei is an important lifeline for the company," says Dan Wang, technology analyst at Gavekal Dragonomics, a research firm.
"Nonetheless, Huawei will try to design out US components and continue to build its own capabilities. It can't allow its survival to be contingent on US political actions."
Reducing reliance on the US was a theme Ren returned to repeatedly during the interview. He spoke with the urgency of a man who, at that time, risked losing his company once several months of inventory ran out.
"We are looking for alternatives [to US-made technology]," he said. "We are developing our own components and we have strong expertise in doing so, which will enable us to survive."
He ticked off a list of areas most vulnerable to disruption from a rupture in the US supply chain and then detailed where he thought Huawei stood in terms of being able to replace or develop its own components, service and intellectual property to plug any gap.
"We don't have too many problems with chips, as we can create most of what we need," he said. "We don't have big problems with our hardware. But there is some impact on our software systems."
Independent analysts had a less optimistic view. Huawei's Achilles heel is in chips, according to Credit Suisse, including radiofrequency varieties used to broadcast mobile signals for phones; and field-programmable gate arrays (FPGAs), critical to telecoms equipment such as 5G base stations. Both areas are dominated by US suppliers for which there are no obvious alternatives who manufacture on a similar scale.
Software is another key vulnerability. Two-thirds of the cyber security software tools used in Huawei products come from US suppliers, according to executives at the Chinese group, who declined to be identified.
Nevertheless, Ren appeared confident that solutions could be found. "Even if the [US] continues to cut off our supply of these things," he said, "we will be able to get the 'holes' fixed and catch up."
Another weakness is the reliance of Huawei's smartphones on Google's Android operating system. As a replacement, Ren talks about repurposing a homegrown operating system, called Hongmeng, to install in its mobile phones and support an ecosystem of apps.
This process of localisation and substitution that Ren describes goes far beyond Huawei alone. "Made in China 2025", a signature policy of President Xi Jinping, was launched in 2015 with the aim of making China a technological superpower. It envisages global leadership in 10 core sectors including "new-generation information technology".
Made in China's goals of achieving high levels of "self-sufficiency" in such industries — by substituting foreign technology with domestically-developed alternatives — have made the blueprint deeply unpopular in the US and Europe. In recent years, China's state media has downplayed the programme, but Huawei's strategies now chime with Beijing's industrial policy.
Strains of techno-nationalism run through China's industry and are by no means limited to state-owned companies. Jack Ma, the billionaire founder of tech giant Alibaba, last year warned against US dominance in semiconductors, fretting over the vulnerabilities that countries could suffer if US manufacturers restricted supply.
"If we do not master the core technologies, we will be building roofs on other people's walls and planting vegetables in other people's yards," Ma said.
Ren does not come across as a nationalist. His eclectic international taste is on show not only in the decor of his company headquarters but also in the vast new faux-European campus he has built in Dongguan, a city in the southern Chinese province of Guangdong.
To a European, the architecture in the campus feels surreal. A replica of Heidelberg Castle in Germany is home to the Huawei research unit and there are 12 imitation European towns — with buildings reminiscent of Oxford, Paris, Verona, Bruges and others — dotted across parkland connected by a funicular railway reserved for employees.
Perhaps such internationalist credentials help Huawei — which employs over 188,000 people in 170 countries — live up to its global ambitions of conquering the market for 5G, a new generation of superfast services that promises to usher in the "internet of things".
So far, it has won 50 contracts for 5G outside China and shipped 150,000 5G base stations, according to executives. Asked how many countries around the world he expects to adopt Huawei's 5G equipment, Ren said: "About 135 to 136 countries. The US and Australia won't choose us. Most European customers will."
In some countries, such as the UK, winning acceptance has been an uphill struggle. Suspicions over whether Huawei may have installed "backdoors" in its systems — through which it might eavesdrop on sensitive communications — have pulled the company into an expensive official review.
The UK is also reviewing the source code that underpins Huawei's systems to ensure it is safe, having found "vulnerabilities". "The UK is not rejecting us; it's telling us that our systems have vulnerabilities," he said. "We are both working to ensure security."
In Europe, the road to acceptance appears equally tortuous. The General Data Protection Regulation, the EU-wide data privacy regime, has obliged Huawei to overhaul its systems.
"This will require us to redevelop networks," Ren said. "It will take about five years to re-architect all products, which means a lot of effort across the company."
Meanwhile, the company continues to fight a rearguard action against longstanding suspicions that swirl around its links to China's security state. Ren said his own military background proves nothing: "It's true that I was once a soldier, but that does not mean that Huawei has ties to the military."
With so many diverse pressures, Ren might be expected to welcome efforts by large US semiconductor companies that are understood to be lobbying in Washington to resume sales to the Chinese company. But his response to this is brusque.
"We don't know what they are doing," Ren said. "We have switched from seeking development to fighting for our survival. We are trying to gather together scientists to make the most advanced future technologies, so that we can [just] fight back."
Governments ask Huawei: 'Is it safe?'
For many of the 140 countries Huawei sells telecoms equipment to, the question is not whether to allow the Chinese group into their networks or not, but how to assess and mitigate risk. Although the US has been pressing its military allies to bar Huawei from their 5G networks, a number of European governments are still weighing their options and have begun security reviews.
The UK has the strongest security assessment process for Huawei. In 2010, the company set up the Huawei Cyber Security Evaluation Centre under the watchful eye of the UK's GCHQ intelligence agency, following growing concerns over the threats posed by security flaws in critical infrastructure.
The HCSEC tests whether Huawei equipment can be broken into, and reviews the source code behind its software. And while it has not found evidence of backdoors built into Huawei's software that could allow Beijing to monitor users' communications, it has found a string of mundane but serious vulnerabilities that could allow hackers, either state-backed or commercial, to access global telecoms networks.
HCSEC's latest report in March warned that it could only provide "limited assurance" that risks to national security had been mitigated, criticising Huawei for failing to improve its cyber security practices. The main reason behind the "limited assurance" is that HCSEC still needs proof that the source code Huawei is providing for inspection matches the code used in the UK.
Huawei argues that the UK's review process is the toughest of any in the world and its competitors have not faced similar levels of scrutiny. But security experts say that the UK's model is far from foolproof, because Huawei rolls out software updates which are not screened by the HCSEC.
The difficulty of verifying Huawei's security highlights a problem facing all governments' ability to screen their equipment providers. Trust and geopolitics, not just technical reviews, play a large part.
"We're between a rock and a hard place between China and the US," John Suffolk, Huawei's global cyber security officer, told the FT earlier this year, "but that's the realpolitik of the situation, and there's nothing that we can do about that".
Written by: James Kynge, Yuan Yang and Sue-Lin Wong
© Financial Times
