Huawei probed for security, espionage risk

Chinese telecom giant's pursuit of building the next generation of digital networks in the U.S. prompts outcry in Washington

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Chris Johnson: The problem I think is really it boils down to an issue of will the company take some steps to make themselves, you know, more transparent about their operations, and what their ultimate goal is, especially this relationship with the Chinese government, with the Chinese Communist Party and with the People's Liberation Army.

Johnson says the military has always played a role in Chinese telecommunications, and that Huawei's reclusive CEO served as an army major in telecommunications research before he retired and founded Huawei, supposedly with a few thousand dollars in savings and no help from the Chinese government.

Steve Kroft: What could you tell me about the guy that runs this company? Ren?

Chris Johnson: Ren Zhengfei, yeah. He's a very mysterious figure. And, you know, there really isn't that much known about him.

Steve Kroft: Has he ever given an interview?

Chris Johnson: Not that I'm aware of. Of course it does generate these concerns about why he won't give an interview and why he won't say something about his role in the company and his philosophy of how the company operates.

Unlike Western companies that are usually regulated and scrutinized, about the only entity privy to the inner-workings of Huawei is a Communist Party Committee, which has offices inside the company's headquarters.

Chris Johnson: You know, at the end of the day, the Communist Party controls the entire economy. They ultimately decide who the winners and losers are. The ultimate leverage that they have over these type of companies is that they can, you know, launch a corruption investigation against the chairman, for example.

Steve Kroft: If the Chinese government told Huawei that they wanted them to spy on the U.S. telecommunication system, and extract information, could Huawei say no?

Chris Johnson: It'd be very difficult for them, given the nature of their system.

Jim Lewis: Here, companies are used to, you know, throwing their weight around and telling the government what to do. In China, a company is a Chia pet. The state tells them what to do, and they do it.

There is no hard evidence that's happened with Huawei, but the Obama administration has been unwilling to take the risk. Two years ago, when it appeared that Huawei might land its first big American deal -- a five billion dollar contract to build Sprint's new 4G wireless network -- the U.S. government stepped in.

Jim Lewis: You had the Secretary of Commerce call the CEO of Sprint and lay out the U.S. concerns. Say that the U.S. was really worried about Huawei. And they would be a lot happier if Sprint didn't do the deal.

Steve Kroft: And Sprint said, "OK."

Jim Lewis: Sprint said, "OK."

Since then, Huawei has blanketed U.S. airways with commercials and hired an army of lobbyists and public relations firms to help it get a foothold into the world's largest telecom market.

Jim Lewis: They're determined. They're in it for the long haul. The line that most people think about is, Mao had a strategy called "Win the countryside, surround the cities, and then the cities will fall." And Huawei seems to be following that Maoist strategy.

In the last couple of years, Huawei has managed to install and maintain a handful of networks in U.S. rural markets, including a vast quadrant of southwestern Kansas. Craig Mock is the president and general manager of United Wireless, based in the historic cowboy town of Dodge City.