Crisis Communications: Can Huawei Recover from U.S. Accusations – and its PR Mistakes?

Chinese telecommunications manufacturer Huawei faces a giant public relations task of building trust and improving its reputation.

U.S. officials say Huawei creates backdoors in gear it sells to telecom networks worldwide to enable the Chinese government to steal U.S. government and corporate secrets, threatening national security. The U.S. government has also accused Huawai’s chief financial officer, who is the daughter of the founder and CEO, of evading Iran sanctions and is seeking her extradition from Canada. Huawei denies the charges and sued the U.S. government, arguing that it had been unfairly and incorrectly banned as a security threat. The lawsuit will force the government to make its case against the company more public, but it could also leave Huawei vulnerable to deeper scrutiny, experts say.

Finally recognizing the need for better communications, the privately held company has held media tours at its facilities and company founder and CEO Ren Zhengfei has held media interviews. PR experts don’t see an image turnaround any time soon. Gaining trust requires a long-term commitment.

Previous PR Mistakes

The company’s previous mistakes account for much of its current problems. Until now, it has placed little priority in PR despite its burgeoning sales. Its CEO rarely, if ever, talked to reporters or appeared in public forums.  The company’s low profile led to a perception of secrecy and possible complicity with the Chinese government.

Although the company hired global PR firms in the past, its executives regularly ignored and second guessed recommendations from outside communications experts and senior management in local markets, communications pros told the Financial Times.

Top executives in tech firms like Huawei often come from engineering backgrounds and tend to consider communications unimportant, even a waste of money, points out Lou Hoffman, president and CEO of The Hoffman Agency. In addition, PR is relatively new in China. The company didn’t hire a non-Chinese senior PR executive with international experience to work outside of China until 2011. It received little media coverage despite its growing business until 2012 when the House Intelligence Committee warned that Huawei and ZTE, another telecom supplier, posed a threat to national security.

The Invisible CEO

The company’s biggest PR mistake: the lack of Ren’s media appearances.

Although a well-informed and well-spoken CEO represents one of the most effective PR tools, Ren remained mostly invisible to the media. Rather than fly to the U.S. or meet with international journalists based in China, he finally talked to journalists in 2013 in New Zealand, Hoffman recounts. The interview did nothing to change the company’s image in the U.S.

CEO media appearances before a PR crisis strikes builds trust and familiarity with journalists and the general public. “The point is, if the CEO waits for a crisis to talk to journalists, the title forfeits much of its power in shaping public perception,” Hoffman says.

The Wrong Tone

Ren struck a defiant tone in recent media interviews. “There’s no way the US can crush us,” he told the BBC. “If the lights go out in the West, the East will still shine … America doesn’t represent the world.” It is true that the U.S. accounts for only a small fraction of Huawei sales. Europe accounts for more. Most sales are to telecom providers in Far East countries.

William Plummer, former head of Huawei’s U.S. public and government relations department, called the remarks ill-advised. “Five years ago would have been the time to do it. I’m not sure that being confrontational now is a good idea,” Plummer told the Financial Times.

The BBC interview wasn’t a bad decision, Hoffman says. The problem was Ren’s lack of media appearances over the last 26 years. The company can improve its reputation over time if it consistently offers greater access to journalists, analysts and other influencers, not just after negative news reports.

Specifically, Hoffman recommends that Huawei:

• Appoint someone to its Board of Directors who has international communications experience and is from the West.
• Have the CEO visit the U.S. twice a year, once to New York and once to Silicon Valley. (Problem: The U.S. could detain the CEO as it asked Canada to do with the Huawei CFO.)
• Publish a monthly point of view article under Ren’s name on Medium.
• Establish an internal communications program to emphasize the value of PR and reputation management to employees.
• Include communications training in new employee onboarding.
• Complete a third-party audit or analysis to alleviate concerns that the Chinese government can commandeer Huawei’s equipment to access private information.

The last point is the most important. Careful, random inspections of Huawei’s gear in overseas telecom networks by an independent engineering company will almost assuredly identify the presence or absence any secret circuits or software that could transfer intelligence to the Chinese government.

PR and CEO communications can only do so much to help Huawei’s situation. Huawei and its supporters must demonstrate that the U.S. government is wrong or at least off-base in its charges in order to boost trust of telecom companies and governments in other countries.  After building trust and sales in other countries, then maybe, Huawei can tentatively try to build their business in the U.S. market, but probably only after a change of administration. It’s unlikely that this administration would admit an error.

The irony is that both the Chinese government and the U.S. government, as revealed in the Edward Snowden leak of National Security Agency documents, already have the capacity to intercept most all telecom transmissions. Neither government needs secret circuits or code in equipment manufactured by Huawei or any other telecom equipment manufacturer to conduct electronic surveillance.

Bottom Line: Trapped in a serious PR scandal, the Chinese telecommunications equipment manufacturer Huawei belatedly recognized the importance of public relations. Its tardy entrance to PR faces substantial challenges. Improving its reputation and winning trust will take years.