A Blog by Jonathan Low

 

Apr 18, 2011

Transparency Triumph? Huawei Opens Up Its Board to Scrutiny

Funny thing about that. As many western companies have discovered, when a company really wants something, like a entre to a new market, transparency can prove useful. Traditional objections to openness are usually cultural and legal; cultural in that family-owned businesses or those started in countries where fear of interference and taxes predominates over other considerations tend to resent what they see as outside interference despite their being pubic companies. Legal in that corporate counsel generally advises not to disclose anything the company is not forced to do. The implication in this situation is that a major Chinese company bowing to the same global reality as western companies have done signals that an acceptance of some western norms when it is in its self interest to do so underscores the reality of dependence on expanding in the global economy beyond being a manufacturing platform. Kathrin Hille reports in the Financial Times:

"Huawei has for the first time made public the members of its board, in an attempt to improve transparency and address US concerns about its alleged links to the Chinese military.

The biggest change in the Chinese telecoms equipment maker’s annual report for 2010, to be published on Monday, is that Huawei has included for the first time a list of names, pictures and biographies of the people who run the company.

This follows a series of failures to win business and acquire assets in the US due to suspicions among some US lawmakers and policymakers that the company could be a front for the Chinese military. The company’s founder and chief executive, Ren Zhengfei, was once an engineer in the People’s Liberation Army.

Sun Yafang, who has long been the public face of the company, continues to chair the board. Her biography in the report, however, fails to mention that she once worked for the Ministry of State Security, a detail which has been reported in Chinese media and which has reinforced suspicions in the US over potential close links between Huawei and the Chinese state. Huawei did not answer questions on whether this detail was false or why it had been omitted from Ms Sun’s biography.

Huawei has expanded its board of directors from nine to 13. Among the nine executive directors is Meng Wanzhou, Mr Ren’s daughter, who is also the chief financial officer. Among the five members of the supervisory board is Ren Shulu, his brother. Both family members have recently joined the respective boards, according to sources close to the company.

The personnel line-up suggests that Mr Ren’s family plays a significant role in the management of the company, but it should lay to rest, at least temporarily, rumours about a power struggle at Huawei. Late last year, Chinese press reports said Mr Ren was seeking to appoint his son Ren Ping to the board and trying to get Ms Sun to step down to prepare a leadership succession. Huawei rejected the reports as groundless.

Besides Mr Ren, three other Huawei veterans, including Ken Hu, chairman of its US subsidiary, are listed as deputy chairmen.

The four non-executive directors the company has added to its board are all long-time Huawei executives, but represent a younger generation. They include Chen Lifang, vice-president in charge of corporate communications.

The annual report also reveals a management restructuring aimed at supporting an expansion beyond Huawei’s traditional business with telecom operators.

Faced with a slowdown in its main field of business – selling network infrastructure to telecom carriers such as British Telecom, Telenor and China Mobile – Huawei is also seeking to become a leading supplier of handsets and other mobile devices.

0 comments:

Post a Comment