Who controls Huawei? Here’s an explainer on its ownership structure

A research paper questioning the independence of Huawei Technologies put the world’s biggest telecom network gear maker back on the offensive last week as it held a press conference to rebut the paper’s central assertion that it may ultimately be controlled by the government.

Photo credit: Kārlis Dambrāns

The paper, jointly written by Donald Clarke of George Washington University and Christopher Balding of Fulbright University Vietnam, said that Huawei’s controlling holding company – 99% of which is held by an entity called a “trade union committee” – could mean Huawei is owned and controlled by the government if the committee functions like similar organizations in China.

Huawei dismissed the claim at a press conference in Shenzhen on Thursday, saying the trade union committee had been established to meet legal requirements and that it only had oversight of after-hour staff activities such as badminton and hiking.

The latest spat over ownership and control marks another twist in the road as Huawei seeks to fight off US accusations that its gear poses a national security risk and that countries should reconsider including the Chinese giant in their 5G network infrastructure plans.

Here’s what you need to know about Huawei’s trade union committee and ownership structure.

1. Why does the research paper take issue with Huawei’s relationship to the trade union committee?

The research paper finds that Huawei Investment & Holding Co., the parent company of Huawei Technologies and its other subsidiaries, is 98.99% owned by Huawei’s trade union committee and 1.01% owned by Huawei’s founder and chief executive Ren Zhengfei.

In China, company trade unions report up into more senior trade union organizations, theoretically all the way up to the All-China Federation of Trade Unions, which is controlled by the Communist Party of China. Therefore, the paper deems the telecom equipment giant could be considered as owned and controlled by the government.

Huawei’s relationship with the Chinese government has been a crucial point of contention amid US efforts to persuade its allies to ban the use of Huawei equipment in next-generation telecoms network infrastructure on the grounds that the Chinese company could be manipulated by China’s Communist government to spy on other countries and disrupt critical communications.

Huawei has repeatedly and vehemently denied these assertions. Although Ren joined the People’s Liberation Army in his youth and the ruling Chinese Communist Party, he has also said he would “never do anything to harm any other nation.”

Last week, UK newspaper The Times reported that the CIA had told spy chiefs that Huawei has taken money from the People’s Liberation Army, China’s National Security Commission, and a third branch of the nation’s state intelligence network, citing an anonymous UK source. Huawei described the report’s claims as completely groundless.

2. What role does Huawei’s trade union play in the company?

China’s Trade Union Law forms the legal basis for trade union organization in the country and it requires that a company with 25 or more employees forms an Enterprise Trade Union, with the aim of protecting the legal rights and interests of employees.