Huawei a reminder companies still have work to do in Australia

Huawei a reminder companies still have work to do in Australia

Fri, 06/07/2018 - 09:30

CONNECTIONS Despite issues in the United States and Australia, Huawei is a global leader in telecommunications networks. Photo: Reuters

No other foreign company operating in Australia has received the amount of media and public attention in recent years as Huawei.

The Chinese technology giant’s presence and operations in Australia have become a focal point in recent months as tensions between Australia and its largest trading partner become more complicated.

Despite being banned from participating in the National Broadband Network in 2013, there are talks within the Australian government to extend Huawei’s ban by excluding it from bidding for the new 5G network on national security grounds.

These concerns were demonstrated when the government took extraordinary measures to block Huawei from building and supplying an undersea high-speed internet cable in the Solomon Islands and opting to pay for it instead.

Should the Australian government ultimately decide to prevent Huawei from participating in the 5G network, it could potentially cut short the company’s future in Australia.

For the world’s largest maker of telecommunications equipment, such a ban would be a significant blow to Huawei’s international reputation.

In an open letter addressed to federal MPs, Huawei referenced recent commentary on its role in Australia as “ill-informed and not based on facts” and invited officials and security agencies to meet with representatives to better understand its technology and operations.

Huawei’s willingness to have an open discussion with the government and public is in contrast to how Chinese businesses typically operate in overseas markets.

The initial experience with Chinese businesses and foreign investment usually comes in the form of state-owned enterprises (SOEs).

Since China’s ‘Opening Up and Reform’ initiative in 1978, SOEs have evolved and shifted from central government-dominated entitles to commercial operations with international governance standards and professional management systems.

In spite of ongoing reforms, SOEs remain vehicles of national policy and still dominate large industries such as finance, resources and telecommunications.

The co-existence of government entitles and private profit-seeking companies and the complexity of these relationships have caused much tension and confusion for Chinese brands overseas.

When operating in overseas markets like Australia, Chinese businesses and brands often keep a low profile.

Huawei on the other hand has done quite the opposite, with corporate sponsorships of the Canberra Raiders rugby league team and the Gold Coast Suns in Australian rules football.

Chinese businesses also often typically employ and appoint Chinese nationals to their offshore workforce and board. The Huawei team in is led by a local board and employs more than 700 people across Australia.

Huawei’s approach to Australia appears to have done very little to change the perception of its brand and, to a certain extent, the reputation of Chinese businesses and investment in Australia.

The 2018 Lowy Institute poll ‘Understanding Australian attitudes to the world’ indicated 72 per cent (up from 56 per cent in 2014) of Australians believe the Australian government is “allowing too much investment from China”. Key findings from, ‘Demystifying Chinese Investment in Australia’, a joint research report from the University of Sydney Business School and KPMG found Chinese investments had dropped to $13.3 billion in 2017 – a fall of 11 per cent from 2016.

The same report also indicated a drop of SOE investment in Australia for the first time since 2014 as a result of policy changes from both Australia and China.

Although Chinese investors and businesses continue to see value in Australia as an attractive investment destination with competitive industries to meet consumer demand, 70 per cent of respondents to the KPMG survey revealed the political debate and diplomatic tensions had made Chinese companies more cautious.

Similarly, 67 per cent see the federal government as less supportive, with Australian media viewed as the least supportive of their presence and activities.

These results most certainly reflect Huawei’s recent experience.

Outcomes of the survey and Huawei’s experience are a reminder Chinese companies still have work to do in Australia.

Aspects they could work on include developing greater knowledge and productive working relationships with their local staff, local entitles and sectors like trade unions, community organisations and media outlets.

Appointing local board directors and hiring local staff is a promising start but without resources and a commitment to introducing an overarching company strategy to open up and better integrate business practices to a localised context, Chinese companies will always find dealing with the Australian environment difficult.

In addition to engagement with relevant stakeholders, Chinese companies need to recognise and accept that Australia’s corporate environment and physical infrastructure are vastly different.

Therefore, a more conscious and considered effort into ensuring business practices adapt and adhere to appropriate local laws, policies and regulations should be a priority.

The lack of knowledge and information by Chinese entities about Australia’s corporate environment mirrors this country’s limited familiarity and awareness of the Chinese market.

For Chinese companies and investors it should not just be about making a profit but to be respectful and accountable to the communities and country they are working and investing in.

Judging by Huawei’s approach, it appears Chinese companies are taking appropriate steps to do just that. 

Jieh-Yung Lo is a Chinese-Australian writer, analyst, researcher and commentator. He tweets at @jiehyunglo