Irish spin doctor in thick of Huawei’s battle with the West

As 5G and Huawei’s key role in its global development evolves into a geopolitical battleground, a former junior postman from Letterkenny is in the thick of the action.

Joe Kelly left school at 15 to become a postal sorter in 1980. Decades later he finds himself in China as vice-president for corporate communications for the enormously successful, and deeply controversial, Huawei Technologies.

The son of a butcher and the eldest of six, Kelly’s career shift stems from an encounter one day with a journalist from the post office’s internal magazine, who came to town to do a story on the Letterkenny operation. “Wait a minute,” he asked the reporter. “So, your job is to travel and interview people and take photos?” Kelly reckoned he could do that.

The seeds were sown, but with no Leaving Cert and no money he was still feeling hemmed in as he approached his 21st birthday, until a flash of good fortune fell his way. At the time, An Post was making structural changes and a voluntary redundancy offer of £18,000 was on the table. He jumped at the offer and before long was pursuing media studies at the University of Ulster.

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After graduating he moved to the US and later London where he worked as a business and technology journalist, before turning to corporate communications, running in-house teams for tech companies such as Xerox Europe, Marconi and BT.

Huawei appeared on Kelly's radar towards the end of 2012, very soon after the US Congress House Intelligence Committee unleashed a lacerating report on the business practices of Huawei and ZTE, a fellow Chinese telecommunications entity with designs on the American market.

“The risks associated with Huawei’s and ZTE’s provision of equipment to US critical infrastructure could undermine core US national-security interests,” the report said.

It also accused Huawei of being the subject of “credible allegations of bribery, corruption, discriminatory behavior and copyright infringement.”

“Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems,” the report said, concluding that the US “must block acquisitions, takeovers, or mergers involving Huawei and ZTE”.

Huawei and ZTE insisted the claims were baseless. “Despite our best effort, the committee appears to have been committed to a predetermined outcome,” a Huawei statement said at the time. “We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market.”

In the aftermath of that report, Huawei realised one of the issues they faced was an international public relations one, so they got Kelly on the phone.

“I was hired on the strength of that story,” he says. “Huawei realised if you have a problem in the West, you need people who know how the West thinks.”

Kelly felt he had the right demeanour for the role. “My specialty is crisis management. When things happen, stay calm, don’t get emotional. Play chess, stay two or three steps ahead. I’ve been involved in so many crises I don’t get worried about things.”

When the spectre of a crisis looms, Kelly says he starts with the facts.

“When there is a crisis going on the last thing I want to hear is a colleague saying ‘I think’. We don’t need opinions, we need facts. Be single minded. Ignore opinions. Focus on facts. Communicate them.”

Crisis mode

In early December of last year he moved into crisis mode when he answered a call from a journalist at 5.45am looking for the company's comment on the arrest in Canada of Meng Wanzhou (also known as Sabrina Meng), daughter of Huawei's founder Ren Zhengfei and the company's chief financial officer.

"I hadn't even had a cup of coffee by then," says Kelly. Meng was arrested at the request the of US government, who were seeking her extradition to face criminal charges related to alleged violations of the US trade sanctions against Iran. Huawei denied all the allegations against her, and her lawyers claimed she was a political pawn. US president Donald Trump underscored this, they claimed, when soon after her arrest he said he would intervene in the case if it helped secure a trade deal with China.

Days after Meng's arrest, China detained and imprisoned two Canadians: Michael Kovrig, a diplomat who was on leave and working for an NGO at the time; and businessman Michael Spavor. Canada is demanding their release and international observers say the detentions are clearly political retaliation.

Another Canadian, Robert Lloyd Schellenberg, was sentenced to death in China in January following a one-day retrial on drug charges. He had previously been tried and given a prison sentence.

Two months later China restricted the importation of Canadian canola, a trade worth $2.7 billion (€2.4 billion) annually to Ottawa. Around the same time China’s ambassador to Canada warned of “repercussions” if the Canadian government dropped Huawei from its 5G plans.

Huawei and Kelly maintain Meng is innocent and say they will co-operate with the authorities and seek her vindication. They claim to have no knowledge of the Canadian cases or if they are related. Since that spate of highly-charged events, and the increased scrutiny on Huawei as the company endeavours to spread its 5G reach, Kelly has found himself in the international media firing line with journalists from around the world looking for daily comments.

At a somewhat abrasive public forum in Beijing recently, the bald Kelly rubbed his crown at one heated moment and joked, “You know, three months ago I had long hair.”

In the face of international criticism, Huawei has embarked on a legal and public relations offensive against what it calls an “American smear campaign”. It recently filed a lawsuit against the US government over the ban that restricts federal agencies procuring Huawei products, a practice the Chinese company argues is unconstitutional.

On the PR front, they are attempting to strengthen their corporate affairs and communications side and are aggressively hiring to that end. Reuters reported recently that close to 10 of its senior journalists had been approached by Huawei headhunters and offered annual packages of up to $200,000 for public relations roles.

Kelly says the company is indeed hiring, “but nothing out of the ordinary. We are an expanding company and we have to fill roles as people get assigned to other roles.”

Consumer business

Despite all the brickbats, Huawei appears to be unbruised.

Last year its annual revenue increased by 19.5 per cent year-on-year to $107.4 billion, with profits up 20 per cent to $8.8 billion. While sales from its carrier business took a hit, down 1.3 per cent to $43.8 billion, its consumer business rocketed 45 per cent to $52 billion with smartphones, laptops and other devices becoming its largest source of income. Enterprise services accounted for the additional sales.

Of the 180,000 people Huawei employ, about 80,000 are in research and development. Last year the company invested $15 billion in R&D, $13.8 billion was laid out the year before. The company is now number two in the global smartphone market, ahead of Apple and quickly closing the gap on market leader Samsung. And while it only introduced its first laptop in 2017, it aims to be in the top five in that market by 2022. Moreover, Huawei is widely rumoured to be releasing the world's first 8K television with an integrated 5G connection later this year.

Huawei have more 5G-related patents than any other company and they claim to have 30 contracts to build 5G networks around the world with dozens more in the pipeline. The company accounts for 29 per cent of the global market for telecom equipment, with Nokia and Ericsson 17 per cent and 13 per cent respectively. ZTE stands in fourth place while US carriers, such as Sprint and Verizon, lag far behind.

Huawei employees are said to be driven by a so-called wolf culture which drives them to success. Kelly says they are hardworking and very ambitious, but in many respects he sees “no difference in the way they think, what they do, and why” from his former colleagues in Europe and the US.

At management level, however, “there’s an ideological chasm between the two – we think differently,” he says. “Chinese think longer terms, westerners think shorter term . . . China is more structured. The West is quite individualistic. China is more collective.”

Economic reforms

During the regime of Communist Party chairman Mao Zedong, which began in 1949, industry in China was nationalised and agriculture collectivised. It was only in 1978, after the ousting of the Gang of Four Maoist faction, that Deng Xiaoping introduced initial economic reforms and market principles allowing for the decollectivisation of farming, the opening up to select forms of foreign investment, and some scope for individuals to operate businesses. These reforms opened the country up and the economic and social transformation over the four decades since has taken place at a breakneck pace.

China is now the world’s second largest economy and is quickly gaining ground on the US, but Kelly believes it has still a way to go.

“In many ways China is still behind by 20 or 30 years, but is catching up quickly,” he says. “Particularly in tech, it is developing very quickly. There really is a resonance of national pride in tech development in China.”

For a nation long associated with cheap manufacturing and counterfeit goods, Huawei’s success in high-end global tech markets is a source of pride to many Chinese people. Consequently, when it faces bans and barriers abroad, many see this as an example of the West trying to stymie China’s growth.

With Huawei already holding strong positions in 5G and in growth areas such as the internet of things, the company is often accused of unfair competition as it avails of government subsidies and cheap loans. Detractors also warn that it may be a high-tech Trojan horse, installing “backdoors” in its equipment to facilitate surveillance on behalf of Beijing.

In its defence, Huawei says its systems are open to full testing in advance of installation, where engineers can fully vet any technology.

“Despite all the allegations over many years now not a shred of credible evidence has been found that the company is doing anything like this,” Kelly says.

And with regard to issues that have been uncovered with some of its systems, the company generally puts this down to errors that can happen in any extensive and elaborate system with rapidly evolving technology. Additionally, they suggest their competitors are not subjected to similar levels of scrutiny or suspicion, and if they were then similar glitches in their equipment would be uncovered too.

Kelly said they have never been asked by the Chinese government to hand over any information, “and we wouldn’t do so, if we were”.

National intelligence law

The US and others, however, point to China’s 2017 national intelligence law, which obliges Chinese companies to co-operate with national intelligence agencies when requested. And regardless of this law, if the Beijing government was set on procuring information from a Chinese company, observers say they would not need recourse to the legal system to get it. The government rules with an iron fist and it is widely believed it would simply demand support if it ever wanted it.

Which all leads to a bigger perceived threat in the minds of some: at some future point, when Huawei’s 5G system is deeply embedded in the core of the global technology infrastructure, could the Chinese government threaten to hit the kill switch in the event of some bilateral or multilateral dispute?

The backdrop to this hypothetical concern is the reality that many nations and telecoms operators around the world want to work with Huawei because they have cutting-edge technology, reportedly tend to deliver strong service on schedule, and crucially, often come in at a cost substantially lower than competitors.

Also, many network providers have Huawei 4G technology already in place, and would shudder at the thought of having to replace it. In the UK for instance, a telecommunications industry group recently warned that blocking out Huawei from the country’s 5G space could cost the country up to £6.8 billion (€7.9 billion) and delay the rollout by up to two years.

For Huawei to succeed internationally Kelly says his colleagues will have to go out into the world and learn how to play by other country’s rules and convince clients that they are a reliable partner. “My job is to help my Chinese colleagues understand the way the West operates,” he says. “As time goes by I see my colleagues increasingly get it.”

Activity in Ireland

Nearly a dozen EU countries, including Ireland, are preparing to auction EU licences this year. Huawei has been operating in Ireland since 2004 and employs nearly 200 people across its operations in Dublin, Cork and Athlone, running R&D operations examining 5G, cloud computing, artificial intelligence and the internet of things.

And Kelly is not the only Irishman to hold a senior management role in Huawei. Dubliner David Harmon has been vice-president for global public affairs for the past four years. Previously the 48-year-old Castleknock man was a press officer for Fianna Fáil in the European Parliament. Before joining the Shenzhen tech company in 2014 Harmon worked in Brussels for several years as a political advisor and communication director, and as an advisor to Máire Geoghegan-Quinn while she was commissioner.

Kelly says Ireland is a solid partner for Huawei and he expects strong co-operation to continue.

“On the questions of cybersecurity, Irish industry is supportive. The Irish Government is supportive,” he says. “They know who we are. They are open to the world.”

In August last year the US introduced the National Defense Authorization Act, forbidding government agencies from procuring telecommunications equipment or services produced or provided by Huawei or ZTE Corporation. Recently, US secretary of state Mike Pompeo said that if a country does adopt their technology and puts it in some of their critical technology, "we won't be able to share information with them, we won't be able to work alongside them".

However, the US appeared to back away from that position lately in the case of Germany, which it had urged specifically the ban Huawei. Washington was apparently appeased after Berlin introduced regulations setting very strict 5G security standards for all providers.

As the European licence auctions near, the EU will be assessing Huawei over the next few months to gauge whether it believes it represents a genuine security threat.

Meanwhile, Kelly will keep batting for the Shenzhen multinational and he rejects any implication that he may ever be an apologist of sorts for any corporate misdeeds.

“I’ve never been an apologist for anybody. I have never knowingly misled a journalist. My values are integrity and trust. Without that you have nothing,” he says.

He seems to be flourishing in the adrenaline-inducing role and says that work-wise there is nowhere he would rather be. “Nobody wants to be in the middle of a non-story. I don’t remember a time when I was happier.”