In the past couple of years, Huawei has been under scrutiny, especially regarding its possible ties with the Chinese Government. The company has dodged these claims so far by repeating that it “is a private company wholly owned by its employees,” with an “Employee Shareholding Scheme that involves 96,768 employee shareholders.”
While that might have cooled down some questions about the company’s ownership structure for the time being, a new research paper, titled ‘Who Owns Huawei?’ and published by Christopher Balding of Fulbright University Vietnam and Donald C. Clarke of George Washington University Law School questions the validity of Huawei’s employee ownership claim. The research paper reportedly used publicly available resources to chart out Huawei’s ownership and control structure. The paper concludes that Huawei is not actually owned by its employees, unlike what the company has claimed time and again.
The research paper throws light on the fact that 100% of Huawei is owned by a holding company called Huawei Investment and Holding. Ren Zhengfei, founder and CEO of Huawei actually owns only about 1.14% of this holding company, while the remaining ~99% is owned by an entity called ‘trade union committee’.
The paper adds that Huawei hasn’t revealed anything about this trade union committee, either about its members or its decision-making process. The usual nature of trade union committees in China further fuel the mystery about this entity.
The authors argue that “Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.”
So, the authors claim that we can’t completely rule out the possibility that Huawei may indeed be owned or controlled by the government.
As for the 96,768 employee shareholders often mentioned by the company in reports, the paper states that they just participate in the profit-sharing scheme and not in the decision making of the trade union. They have nothing to do with financing or control. The paper further adds that these shares are canceled when an employee leaves the company.
Huawei did respond to this study to telecoms.com refuting the claims by saying that they are based on unreliable sources and speculations. Find an excerpt of the statement below.
“This report, released by Professor Christopher Balding and Professor Donald Clarke, was based on unreliable sources and speculations, without an understanding of all the facts. They have not verified the information in the report with Huawei, and their conclusions are completely unsubstantiated. Huawei is a private company wholly owned by its employees. No government agency or outside organization holds shares in Huawei or has any control over Huawei.
If you are interested in reading more about this study, hit the source link down below.
