Huawei is 'growing astronomically' despite allegations it spies for China

The arrest of Huawei'schief financial officer is just the latest controversy to hitthe tech giant which has been accused of conducting espionage activities for the Chinese government.

"We don't know to what extent they might be considered an arms length business and to what extent they might be simply an arm of the Chinese government," said David Skillicorn, a professor in Queen's UniversitySchool of Computing.

Huawei Technologies Co. Ltd.has been thrust into the spotlight withthe arrest ofMengWanzhou, itschief financial officer and deputy chairof the board. According to a statement from the U.S. Department of Justice,Mengwas arrested in Vancouver on Saturday and is being sought for extradition by the United States.

The Globe and Mail reported Wednesday thatMengwas arrested on suspicion of violating U.S. trade sanctions on Iran.She has a bail hearing in Canada on Friday.

For years,Huawei has been a source of concern for Western security officials,particularlythe U.S., which hastried to convince other countries not to buyequipment from the China-based firm.

Huaweidenies allegations that it conducts espionage on behalf of China and has saidit's a market-driven business simply looking to compete internationally.

'Significant network security risk'

Some Canadian security expertshave warned Canada about doing business with Huawei, one of the world's biggest telecommunications firms. WardElcock, a formerCSISdirector and deputy minister of national defence, toldAs It HappenshostCarol Off in March that he believesthe company is"essentially under the control of the Chinese government."

"It is hard for me to believe that a company such asHuaweiwould not do the bidding of the Chinese government and would not build traps, back doors into its technology on behalf of the Chinese government," he said.

Earlier this year,Republican Sen. MarcoRubioand Democratic Sen.Mark Warnerwrote to Prime Minister Justin Trudeauwarning him that doing business with Huawei wouldopen Canada up to huge security risks.

Some companies andgovernments have taken heed to those warnings.Last month, New Zealand blocked a mobile phone company from usingHuaweiequipment, saying it posed a "significant network security risk." Huaweiwas banned in August from working on Australia's fifth-generation (5G)network.

On Wednesday, British phone carrier BT said it was removingHuaweiequipment from the core of its existing 3G and 4Gmobile phone networks and would not use their equipment for its planned 5G mobile network.

Canada, so far, has resisted those concerns expressed by the U.S. and security officials. Butthe government has said it is conducting a national-security review to determine whether Canada should join other Five Eyes partners in banning Huaweifrom some projects, the Globe and Mail reported.Five Eyes refers to an intelligence sharing arrangement between Canada, the U.S., U.K., Australia and New Zealand.

Competitive edge

Huawei's equipment is used in telecommunications infrastructure run by the country's major cellphone carriers. The companyhas struck up partnerships with Canadian universities. BCE and Telusare partnering with Huaweito help roll out their 5G networks

The private Chinese company with 180,000 employees is the biggest global supplier of network gear used by phone andinternetcompanies, with over $90 billion US in revenue and $7 billion US in net profits, according to its 2017 annual report.

Just in the last quarter, it became the number two supplier ofsmartphonesglobally, said DaveBolan, asenior telecom analyst at California-basedDell'OroGroup, Inc.

The company has said it sells its equipment through 46of the world's top 50 carriers. According to its website, its products are used in more than 170 countries and regions, serving over one-third of the world's population.They are especially strong in Latin America, the Middle East, Africa and parts of Europe.

"They've been growing astronomically," Bolansaid. "Ten years ago, 15 years ago, we [had] never heard ofHuawei."

Huawei has been proactive in terms of pricing,Skillicornsaid, making it difficult for companiesand governmentsto "walk past the deal."

"They are undercutting the competitors to some extent and making it very hard for governments to explain to voters why they're not taking what looks like this fabulous deal," he said.

One of the security concerns, saidSkillicorn, is that the company is a huge makerof network switches.

"When you use the network switch it sees absolutely everything that's happening in your organization. And so you need to be especially careful about who makes those network switches," he said.

Ties to People's Liberation Army

Part of the distrust of Huawei stemsfrom perceived ties between the company'stop executives and the Chinese government, said James Lewis,cybersecurityand technology expert for the Washington-basedCenterfor Strategic and International Studies.

Huawei's president,RenZhengfei,is a former military engineer for China's People's Liberation Army. And Sun Yafang, a former chairwoman, used to work for the Ministry of State Security which has close links to China'sintelligence services, Lewissaid.

Huaweihas denied all accusations that it's used as a front for Chineseespionage.

Ken Hu, one ofHuawei'sthree chief executives, said in an interview at the beginning of the year with the Wall Street Journal that thecompany isn't a security threat.

Its "global business is testament to the fact thatHuaweiis not a vehicle for any government or any agency of putting surveillance on another country," he said.