Shutting the doors on Huawei

The Attorney-General’s confirmation of the Australian Government’s ban on any involvement by Chinese telecommunications firm Huawei in the construction of the National Broadband Network is fascinating and perplexing.

It’s fascinating because Cabinet-level ministers - Malcolm Turnbull and Andrew Robb - have been making noises as late as last week consistent with a government preparing the ground to overturn the ban.

And it’s perplexing because no-one outside of the ASIO and Defence Signals Directorate briefing rooms have been able to put a reasonable case for why the ban must remain.

Regardless, Attorney-General George Brandis hasn’t left much wriggle room. Huawei had been prevented from tendering for any work on the NBN project by the previous Labor government, and that ban will continue under this government.

While Huawei maintains a positive view - the company says it believes the government is still considering the issue - the reality is that the Minister has issued a statement confirming that right now, the ban remains in place.

It’s pointless to speculate what the advice the intelligence services have given successive AG’s since the ban was put into effect.

But there is plenty of talk, nonetheless, suggesting the use of Huawei in the nation’s core network would be a deal-breaker for US intelligence services. That Australia would find itself out of the club and out in the cold.

Bent like a pretzel

Huawei is playing the long-game in relation to the Australian relationship, but Senator Brandis’ unexpectedly expedient and categorical decision on the issue is a harsh blow.

The company has bent like a pretzel in relation to Australia.

In the Huawei world, Australia is its own geographic region, the only one-country region on its corporate map (aside from its own China domestic market.)

Huawei Australia has its own board of directors, with three independent directors. This is the only Huawei country market with its own board. It includes the former Victorian Premier John Brumby, Australia’s longest serving Foreign Minister Alexander Downer, and a former Rear Admiral and 36-year veteran of the Royal Australian Navy, John Lord (who is also chairman of the local outfit.)

It has hosted a conga-line of senior officials through its Shenzhen headquarters, including communications minister Malcolm Turnbull and foreign minister Julie Bishop, In fact, Huawei even had Greg Sheridan - the hawkish Foreign Editor from The Australian - travelling to China for briefings and coming away with a surprisingly moderate view.

The company has engaged with government and opposition in largely equal measure, and is an active and positive contributor to industry and government forums.

In recent months it has held information sessions for Australian companies in seeking to sell into Huawei, to become a supplier to its multi-billion dollar global procurement needs.

This is more than a charm offensive. This is engagement on a massive scale.

No love on NBN 

Huawei is a very big player in the Australian market, which is healthy and sizeable, but in global terms only a modest size, given the attention the company has put on it. The company already has contracts with other network providers outside of the NBN measured in the hundreds of millions of dollars.

And it is a huge player in the fast-growing consumer market for handsets and tablets.

I visited the Huawei headquarters last month and was given a tour of the Huawei campus. And course, the Huawei campus is utterly fascinating, just as the very brief history of the company is fascinating. But it’s unlikely you can get an insight into the intelligence community issues with the company.

Regardless of its charm offensive, Huawei is still not being welcomed onto the NBN project. Outside of the government, we don’t know why this is the case.

There are smart people with better information looking at this issue. It will be a thorn in the broader bilateral trade relationship at the highest levels, and will almost certainly be an problem for FTA negotiations.

That’s a great shame and it casts an unsavoury shadow on the Australian tech sector, given Huawei’s potential as a substantial connection into the Chinese market.

Correction: An earlier version of this article stated that Malcolm Turnbull had visited Huawei as a guest of Huawei. Minister Turnbulll paid his own way to tour Huawei's facilities. 

He has a special interest in public policy as it affects the tech sector and has written for newspapers and trade magazines, including The Australian, the South China Morning Post, InformationWeek and PC Week.

Contact James at james@innovationaus.com