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News, Asia

Saturday, May 17, 2014

News, Asia

Banning Huawei's products may benefit national security

The China Post/ANN | Saturday, May 17, 2014

Hon Hai Precision Industry Co. Chairman Terry Gou has been busy making controversial public statements lately. Even for the outspoken tycoon, the recent outburst of comments on hot-button issues such as wage stagnation, the Sunflower student-led movement and the government's block of his plan to use Chinese equipment in his 4G base stations is uncommon.

The mass media followed developments surrounding the unnamed employee who criticised Gou's vow to help raise Taiwan's living wage as hypocrisy with similar fervour to fans hooked on a melodrama.

Days after Gou said he would acquire companies that offer monthly wages lower than NT$22,000 and raise salaries, an employee working for Innolux Corp. known by her Internet name Leung Xiao-hua, said in an online comment that she earns less than NT$22,000 in the Hon Hai-affiliated company. She urged Gou to practice what he preaches and raise the salaries of those currently on his payroll first.

Gou and his company acted quickly in response to the comment. First, Gou announced that the Hon Hai Group will raise the salary of workers at three of its subsidiaries to the same levels as the parent company, where starting wages for college-educated engineers and administrative staff is at least NT$36,000 (NT$26,000 for production operators, who do not require a college degree).

On the other hand, Innolux obtained not only the identity of the online whistle-blower, but also a recording of what it claims to be her formal apology. Leung, who Innolux didn't name but revealed as a mother in her early thirties working in a Tainan factory, said in the recording that she didn't notice that Gou was referring to college graduates when he made his acquire-and-wage-hike plan.

Innolux's hands-on approach in tackling the Leung incident courted controversy of its own as it raises concerns over a conglomerate worth billions mobilizing against a young mother. Anticipating such concern, Innolux Chairman Tuan Hsing-chien vowed not to penalize Leung for her actions.

Even if the public was not completely reassured by Tuan's promise, however, Hon Hai and Gou will probably not see much damage to their public image for their treatment of Leung. Gou has long been known for his aggressiveness, which many see as contributing to his rise.

More importantly, however, the brouhaha over Leung and the so-called "22K" wage problem also serves to divert attention from the more important issue of Gou's plans to build 4G base stations in Taiwan with parts from mainland Chinese telecommunication equipment manufacturers. Few would take Gou's vow - name any under-NT$22,000-paying companies and he will buy them - seriously. Gou's 4G telecom business in Taiwan, however, could be a serous money-maker and the potential national security threat posed by Huawei is just as serious.

The founder of Huawei, Ren Zhengfei, was an engineer in mainland China's People's Liberation Army in the 1980s. Western governments such as the US, the UK and Australia have previously raised security concerns that Huawei's equipment could open their networks and allow unauthorized access by the mainland Chinese government and the PLA if used in their grids.

Gou has threatened to boycott payment of taxes to Taiwan's government due to the National Communications Commission's current indecision on whether or not to allow Huawei parts in its 4G stations. Hon Hai later said it is not insisting on using Huawei equipment but is only demanding that the government make up its mind soon.

While Hon Hai has stressed that Huawei equipment will only be used in non-core and non-security-sensitive parts of the 4G base stations, the government should be vigilant when it comes to any telecomm equipment made by a PLA-related company. Edward Snowden's revelations concerning the wide-ranging and comprehensive wiretapping programs by the US National Security Agency has clearly shown the extraordinary lengths any government will go to in order to mine communications for intelligence purposes.

Hon Hai has a point that the government should not add pressure to investment-heavy 4G businesses through indecision. But if a swift decision is needed and there is not enough time to properly vet the Huawei equipment Hon Hai proposes to use, the government should be inclined toward safety and ban the equipment. Banning Huawei's relatively cheaper products will not be unfair to Hon Hai as it will block all 4G network operators from using them. And while it might increase the operating cost of Taiwan's 4G telecom providers, it would be a fair price to pay for Taiwan's national security.

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