Huawei appears to have reduced its publicly reported research spending in Australia amid ongoing national security concerns and increased scrutiny from government bodies.
Australian financial disclosures from the company show a decline in locally reported research expenditure from $81,000 in 2016 to zero last year. That contrasts with significantly larger figures in earlier years—$8.3 million in 2015 and $10.1 million in 2014.
The company disputes that local research activity has been curtailed.
A Huawei spokesman pointed out that the firm has donated more than $1 million worth of Internet of Things (IoT) equipment to James Cook University in Cairns and invested $6 million in a new innovation centre at its Sydney headquarters.
Jeremy Mitchell, Huawei Australia’s Corporate Affairs Director, said that local research costs are frequently charged back to company head office, which explains why the locally reported amount may be zero or close to zero.
In effect, Huawei says that research spending is being recorded at its global headquarters rather than in Australia. While charging costs to head office is common corporate practice, that explanation may do little to reassure ministers and security agencies who remain concerned about links between Huawei and the Chinese government.
Ongoing Security Concerns
Telecommunications media first highlighted Huawei’s difficulties in Australia last month after Labor MP Michael Danby called for a ban on purchasing 5G equipment from Chinese suppliers, citing national security risks.
Danby warned that “Huawei and ZTE must report to a communist party cell at the top of their organisations” and urged parliament, the media and the public to prevent these companies from participating in Australia’s 5G rollout.
Huawei and other Chinese vendors have consistently denied formal ties to the Chinese government, but they continue to face scrutiny from multiple governments, including those of Australia, the United States and the United Kingdom.
In the UK, Huawei cooperates with security agencies through a dedicated centre where equipment is inspected before being deployed in national infrastructure.
In 2012, Huawei Australia Chairman John Lord suggested establishing a similar assurance centre in Australia to evaluate the security of globally sourced technology products.
“In the age of globalisation, no country has the ability to sustain its own isolated ICT industry, indeed no country should. All countries must also develop security assurance frameworks to effectively analyse technology products which are globally sourced,” he said, adding that the UK had already taken such steps and others should follow.
Earlier this month, Lord reiterated those points on Radio National’s Breakfast program, emphasising openness and equipment inspection: “We believe that all telcos should be open, and equipment should be checked. We build equipment on the supposition that nations or companies or rogues will try and crack your equipment.”
Previously, when he served as communications minister, Prime Minister Malcolm Turnbull barred Huawei from bidding to provide equipment for the National Broadband Network (NBN). In Parliament, Danby urged a similar exclusion for 5G procurement.
Huawei’s accounting choices and continued investments in local projects leave observers debating whether the company’s reduced reported research spending in Australia reflects a genuine decline in activity or simply a relocation of budget reporting to its global head office. With national security concerns still prominent, decisions about Huawei’s role in future Australian telecommunications infrastructure are likely to remain contentious.
What do you think about Huawei’s position in Australia and the broader security debate?