Huawei invests $2 billion in the UK

Chinese telecommunications giant Huawei will invest the equivalent of $2 billion in the UK. During the annual meeting of the World Economic Forum in the Chinese city of Tianjin, the world's second largest networking supplier announced long-term plans to expand its activities as well as its research and development.

According to the announcement, the company will invest $1 billion (approximately £650 million) directly, while planning to procure components to the value of another $1 billion in the UK market over the next five years. The number of Huawei employees in the UK is planned to rise from 800 today to 1,500 by 2017. The company said that the multi-billion dollar investment was the reason for a meeting between prime minister David Cameron and Huawei founder Ren Zhengfei in London.

The UK is "one of the most important European markets in which Huawei has invested", said Ren. He added that Britain's highly skilled workforce, and its internationally respected legal and educational systems were strong factors in Huawei's decision. Cameron, in turn, described the UK as an open market that welcomes overseas investment.

Huawei is the largest private Chinese company and has its headquarters in Shenzhen in South China. Globally, the company has 146,000 employees in over 150 countries. Its revenue in 2011 increased by 11.7 per cent to 203 billion yuan, which is equivalent to £19 billion – two-thirds of which was generated abroad. Huawei is expanding in the smartphone and tablet computer sectors and plans to grow by 15 to 20 per cent this year. 45 of the 50 largest telecommunications networks worldwide currently use Huawei components.

However, the Chinese company has had to dispel various political concerns about its expansion strategy. On several occasions, Huawei has attracted attention because of security holes in its products. Reports about Huawei, such as one entitled "The long arm of the Chinese secret service" in German Wirtschaftswoche magazine, don't inspire confidence in the Chinese company in Western countries. Governments fear that the Chinese could introduce secret backdoors in the critical infrastructure of the countries where Huawei is commercially active; in Australia, Huawei was excluded from contracts to build a national broadband grid. Efforts to dispel political concerns have, so far, also been unsuccessful in the US.

Huawei had to make considerable efforts to win this endorsement of the UK government. The company has reportedly worked with UK government security agencies to eliminate potential government concerns about using Chinese hardware. Industry magazine The Economist recently reported that a team of experts is working in close cooperation with GCHQ (Government Communications Headquarters), the intelligence agency that is responsible for communication infrastructures in the UK.

(fab)