How arrest of Huawei Technologies CFO extends troubled history with US

07 December, 2018, 06:29 | Author: Brooke Harris
  • Asian markets tumble, China tech hit after Huawei arrest

Meanwhile, news of the arrest has sparked fears on Wall Street that the trade war between the United States and China could escalate.

The handset and telecommunications equipment maker said it complies with all applicable export control and sanctions laws and United States and other regulations.

Hours later, at a regular press briefing, Chinese Foreign Ministry Spokesperson Geng Shuang maintained this strong stance.

As of mid-day Thursday, the Dow was down 442 points, and while Huawei isn't publicly listed, fellow Chinese telecoms giant ZTE was down 6.4 per cent, Taiwan-based HTC was down 8.4 per cent, and Apple and Samsung were both down 2 per cent. Bear in mind tech stocks in general have been taking a battering over the past few months, though.

Trump's tariff hikes this year on Chinese imports stemmed from complaints Beijing steals or pressures foreign companies to hand over technology.

In a statement to The Register, Huawei denied violating America's sanctions on Iran, and vowed to fight any charges against their chief financial officer. It remains privately held and describes itself as employee-owned, though its ownership structure is unknown. It employs more than 180,000 people and previous year had revenue of about $93 billion.

How did the company become so successful?

Top British and New Zealand telecom providers have banned Huawei from their 5G networks, as did the Australian government. Huawei began competing internationally in the 1990s and was known for drastically undercutting rivals on price.

The agency is seeking comments through Friday on how that proposed rule fits with defence legislation signed in August that bars spending on "loans or grants" and specifically targets Huawei and ZTE Corp. Huawei has repeatedly insisted Beijing has no influence over it.

The U.S. almost put another large Chinese firm, ZTE, out of business earlier this year when it banned the company from using U.S. technology. A new law in China requiring any domestic firm to assist the government when asked has also stoked concern.

The electronics giant is doing well with smartphone sales outside of the USA, but they, of course, could be even bigger if they were able to tap into this market.

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How do US authorities arrange arrests in foreign countries? Since then, Huawei is facing operational difficulties in the USA and some other countries like Australia, New Zealand, etc.

Trump's national security adviser, John Bolton, acknowledged that he knew that Canada was planning to arrest Meng on Saturday just as all eyes were on the summit in Buenos Aires.

Sources told Reuters in April that USA authorities have been probing Huawei, one of the world's largest makers of telecommunications network equipment, since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of U.S. export and sanctions laws. Reuters published an investigation nearly six years ago about her and Huawei's ties to a company call Skycom that tried to sell Hewlett-Packard computer equipment to an Iranian mobile-phone operator, in contravention of those sanctions.

Ye Tan, an independent Chinese economist, said Meng's arrest could be used as a "bargaining chip" in the trade talks. "I think because of the super-delicate phase that we're at in terms of U.S".

However a 90-day truce on the tit-for-tat trade war between the two superpowers promised to provide markets with some short term stability.

Traders said the development smashed hopes surrounding the trade war ceasefire announced by President Trump after talks with his Chinese counterpart at the weekend. "Actually it hurts them to make life difficult" for US companies. This sign is usually interpreted by traders as an indicator of coming recession.

Markets were chaotic over news of the arrest.

What might happen to Huawei now?

One report in the New York Times said the United States commerce and treasury departments had subpoenaed the firm over suspected violation of sanctions against both Iran and North Korea. If the case prompts major European countries in particular to turn against the firm, that would have a long-term impact on its growth and influence.

Founded in China more than 30 years ago, Huawei's revenue in 2018 exceeded $100billion for the first time in its history, according to CNBC.

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