Huawei launches a charm offensive — but PR execs say it may face a 'literally impossible' task

Key Points
  • Chinese tech giant Huawei has been stung by a string of recent negative headlines, including a probe on allegations of trade-secret theft, moves from multiple countries to block the company's equipment from sensitive infrastructure projects, and the arrest of its CFO in Canada.
  • A Huawei board member says the company is now committing to being more transparent for "the foreseeable future."
  • Public relations executives say increased transparency is a step in the right direction, but is unlikely to quickly improve the telecommunications company's global reputation.
A man walking past a Huawei P20 smartphone advertisement is reflected in a glass door in front of a Huawei logo, at a shopping mall in Shanghai, China December 6, 2018.
Aly Song | Reuters

Beleaguered Chinese tech behemoth Huawei kicked off 2019 with a charm offensive, in a bid to counter damaging headlines that have hit the company in the past few months.

The company has often been criticized for being too secretive, but has tried to to open its doors more since the start of the year. That comes after the arrest of its CFO on allegations the tech giant committed fraud linked to the skirting of U.S. sanctions, a report that American authorities are probing whether the firm stole trade secrets, and moves from multiple countries to block Huawei's equipment from sensitive infrastructure projects.

In what appeared to be part of a significant public-relations push, the company offered international media a tour last week of its smartphone production factory in Dongguan, an area just north of its headquarters in Shenzhen. And then it took a group of reporters, including from CNBC, to a new campus being built to look like various cities in Europe.

The biggest sign of Huawei's new public positioning came later that day, when the company hosted a round table with Ren Zhengfei, the telecommunication equipment maker's reclusive founder. Ren very rarely speaks to the media, let alone international publications, and is not often seen in public. He spent more than two hours taking questions from outlets including CNBC, addressing some of the allegations thrown at his company.

'Small step in the right direction'

While public relations execs said Huawei's move to open up media access was a good idea, they emphasized that the company has a hard road ahead.

"The willingness of its CEO to enter the media spotlight is a positive move, as is its decision to allow media on to its new campus," said Jonathan Hemus, managing director of crisis communication consultancy Insignia. "However, the sheer magnitude of the allegations against the company renders a charm offensive as, at best, a small step in the right direction."

Such PR exercises alone "cannot restore confidence in Huawei," Hemus added: "Rebuilding trust requires the business to prove that its integrity is as unimpeachable as it claims."

One of the most serious accusations against the company has come from the U.S. government, which alleges that Huawei's networking equipment could be used as a backdoor for the Chinese government to access the data of American citizens. Huawei has denied the claim numerous times. But putting Ren in front of media to address the question is a big step.

'Fake news'

In response to inquiries from CNBC, a representative from Huawei sent a statement attributed to board member Chen Lifang:

Huawei is very concerned about misunderstandings which continue to linger despite our best efforts in recent years to be more open, transparent and accountable. In the past year there have also been false allegations, fake news and rumors spread about Huawei.

Huawei is committed to being even more open and transparent for not only this year but the foreseeable future. We are a privately-owned company in the highly-competitive technology sector with significant R&D programs serving as strategic drivers of our business. For this reason, we have tended in the past to keep a low profile, perhaps lending credence to misperceptions we are too secretive. This is not true and we encourage those making such comments to compare Huawei with other leading technology companies in terms of access to our HQ, staff and senior executives.

We will continue heightening our efforts even though we are a privately-owned company. We will continue to let the facts speak for themselves but strive to better explain what we are doing to connect people and improve technology with our global approach at a time when international collaboration is being questioned. We have been transparent and open in recent years including publishing our annual report disclosing significant amounts of financial data comparable to publicly-listed companies, a sustainability report, extensive dialogue, engagement with stakeholders and frequent media activities."

Some of governments' mistrust of Huawei has been attributed to CEO Ren's status as a former member of the People's Liberation Army and a current member of China's Communist Party. There have long been questions about the relationship between China's ruling party and his company, but the tech billionaire emphasized to the assembled reporters that his personal political views would not compromise the protection of his customers.

"The values of a business entity is customer first, is customer centricity. We are a business organization so we must follow business rules. And in that context I don't see close connection between my personal political belief and our business actions we are going to take as a business entity. And I think I already made myself very clear right now, we will definitely say no to such a request," Ren said last week, when asked by CNBC about whether his ties to China's authoritarian ruling party would stop him from fighting any kind of data request.

While Huawei has long been shut out of the American telecommunications networks, it has enjoyed a strong presence in many other nations. But lately, other countries are turning their back on Huawei and blocking the company from being involved in the next generation of networks known as 5G.

It is literally impossible to start turning around a reputation when it's still getting damaged by new allegations and developments in various investigations.
Jonathan Bernstein
president of Bernstein Crisis Management

Also last week, the Wall Street Journal reported that the U.S. Department of Justice is pursuing a criminal probe of Huawei, alleging that the firm stole trade secrets from its American business partners.

Jonathan Bernstein, the president of crisis management firm Bernstein Crisis Management, said it could be a tough task for Huawei to repair its reputation while bad news continues to come out.

"It is literally impossible to start turning around a reputation when it's still getting damaged by new allegations and developments in various investigations," Bernstein told CNBC by email. "The best option right now is minimizing damage, and it appears that's what Huawei is trying to do, belatedly."

"Global media, categorically, are unlikely to change their editorial content about Huawei just because they've been given the kind of consideration they should have been given all along," he added.

Here's what Huawei's 'Ox Horn' campus looks like – a cluster of European cities

More generally, Hemus said that overall trust in the company would develop more from a consistent approach, not a one-off media strategy.

"Time will tell whether Huawei has the stomach to make a long-term commitment to the business behaviors and open communication required to re-build its reputation," he said.

However, Bernstein added that Huawei shipped more than 200 million smartphones in 2018, growing a little more than 30 percent despite an overall slow market. Huawei is also expected to hit over $100 billion revenue in 2018, and Ren said that the firm would still see growth in 2019, but it would be under 20 percent in 2019 because of "challenges and difficulties in international markets."

Huawei is getting set to release its first foldable 5G-enabled smartphone this year and is working on futuristic products like augmented reality glasses. The company also announced at the end of last year that it had signed 22 commercial contracts with carriers for 5G.