Wanzhou Meng also deputy chairwoman and the daughter of Huaweis founder faces extradition to the U.S., said Ian McLeod, a Canada Justice Department spokesman, declining to elaborate. She was arrested Dec. 1 after the U.S. Department of Justice in April opened an investigation into whether the leading telecommunications-equipment maker sold gear to Iran despite sanctions on exports to the region.
News of Mengs arrest provoked strong protest from the Chinese embassy in Canada, which called it a violation of its citizens rights while demanding the U.S. and its neighbor rectify wrongdoings and free Meng. Her arrest is sure to heighten tensions between Washington and Beijing days after the worlds two largest economies agreed on a truce in their growing trade conflict. Mengs father Ren Zhengfei, a former army engineer, has won acclaim at home for toppling Apple Inc. in smartphones and turning an electronics reseller into a producer of networking gear with revenue surpassing Boeing Co. Hes regularly named among Chinas top executives, and was among 100 business leaders honored for their contributions as the country celebrates the 40th anniversary of opening its economy. His stature at home is roughly comparable to Bill Gates or Michael Dell in the U.S.
The CFOs arrest -- the same day Donald Trump and Xi Jinping dined in Buenos Aires --- is likely to be regarded back home as an attack on one of Chinas foremost corporate champions. While Alibaba Group Holding Ltd. and Tencent Holdings Ltd. dominate headlines thanks to flashy growth and high-profile billionaire founders, Rens company is by far Chinas most global technology company, with operations spanning Africa, Europe and Asia.
U.S. equity futures and Asian stocks slid as Mengs arrest re-ignited concerns about U.S.-Chinese tensions. At a regularly scheduled press briefing on Thursday, foreign ministry spokesman Geng Shuang reiterated China wanted the U.S. and Canada to clarify the grounds for the detention, to release the detainee and earnestly safeguard the legitimate rights and interests of the person involved.
Huaweis ambitions now range from artificial intelligence and chipmaking to fifth-generation wireless. That last effort, a massive push into the future of mobile and internet communications, has raised hackles in the U.S. and become a focal point for American attempts to contain Chinas ascendancy. Shares in several of its suppliers, from Sunny Optical Technology Group Co. and Largan Precision Co. to MediaTek Inc., fell.
Tencent and Alibaba may be domestic champions and huge platforms in of their own rights, but Huawei has become a global powerhouse, said Neil Campling, an analyst at Mirabaud Securities Ltd. It is 5G standards that are at the heart of the wider IP debate and why the U.S. and her allies are now doing everything they can to cut to the heart of the Chinese technology IP revolution.
Canadas Globe and Mail newspaper first reported the arrest, about which the U.S. Justice Department declined to comment. A spokeswoman for Canadian Prime Minister Justin Trudeau referred questions to his countrys own justice department. Huawei said the arrest was made on behalf of the U.S. so Meng could be extradited to face unspecified charges in the Eastern District of New York.
The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng, it said in a statement. The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion. Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, U.S. and EU.
In targeting Huawei, the U.S. is threatening one of the companies at the heart of Xis long-term campaign to wrest the lead in future technologies and wean China off a reliance on foreign expertise.
Once a purveyor of unremarkable telecommunications equipment, Huaweis now No. 2 in smartphone shipments and is shooting for the lead in fifth-generation wireless networks while preparing to take on some of Americas biggest chipmakers. Its already by some reckonings the worlds largest provider of networking equipment to wireless carriers, outstripping the likes ofEricsson ABwith growing sales in Europe. Its declared its intention to surpassSamsung Electronics Co.in phones as well. The company is targeting record sales of $102.2 billion this year.
Trumps administration this year invoked its name in blocking a Qualcomm Inc.-Broadcom Inc. merger that wouldve been the largest deal ever, saying it would hand the lead in 5G to China. But as far back as 2016, the Commerce Department had sought information regarding whether Huawei was possibly sending U.S. technology to Syria and North Korea as well as Iran. The U.S. previously banned ZTE Corp., a Huawei competitor, for violating a sanctions settlement over transactions with Iran and North Korea. That moratorium -- since lifted -- drove ZTE to the brink ofcollapse.
U.S. authorities in 2016 also began voicing concerns that Huawei and others could install back doors in their equipment that would let them monitor users in the U.S., something Huawei has denied.
Senator Chris Van Hollen, a Maryland Democrat, said Wednesday night that Huawei and ZTE are two sides of the same coin Chinese telecommunications companies that represent a fundamental risk to American national security.
While the Commerce Department focused its attention on ZTE, this news highlights that Huawei is also violating U.S. Law, Van Hollen said in a statement.
[caption id="" align="aligncenter" width="800"]
Chris Van Hollen Photographer: Patrick T. Fallon/Bloomberg[/caption]Its unclear whether Mengs arrest could trigger the same sort of sanctions that ZTE incurred. Such a move would be far more significant given Huaweis heft.
In August, Trump signed a bill banning the governments use of Huawei technology based on the security concerns and U.S. allies are either imposing or considering similar moves. That same month, Australia barred the use of Huaweis equipment for 5G networks in the country and New Zealandlast weekdid the same, citing national security concerns. The U.K. is currentlydebating whetherto follow suit. In November, Huawei said moves against it would hinder the development of 5G in the U.S. and raise prices for consumers.
This is what you call playing hard ball, said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. China is already asking for her release, as can be expected, but if the charges are serious, dont expect the US to blink.
With assistance by Kevin Hamlin, Alistair Barr, and Peter Martin
