Huawei’s ownership by trade union committee

Christopher Balding and Donald Clarke have published a paper with interesting details of Huawei’s ownership. They confirm that the profits not reinvested are distributed among the employees.

“The Huawei operating company is 100% owned by a holding company, which is in turn approximately 1% owned by Huawei founder Ren Zhengfei and 99% owned by an entity called a “trade union committee” for the holding company. … What have been called “employee shares” in “Huawei” are in fact at most contractual interests in a profit-sharing scheme. “

Their opinions are clearly influenced by their distaste for the Chinese government and should be disregarded. In particular, the basis for the assertion “Huawei may be deemed effectively state-owned” would apply to every entity within China – and many more in some of America’s close allies.

Balding is clear this is not based on any knowledge of the reality. “We know nothing about the internal governance procedures of the trade union committee.” I looked at Balding’s other work and discovered what I believe is a shortage of factfulness.

We do not live in a “bipolar world split between the major economies with diametrically opposed views on the international order, economic openness, democracy, and human rights.” Balding paper.

I’m not blind to the authoritarian nature of the Chinese government, the massive censorship, and the crushing of political opposition. But Balding is blind to the reality of twenty-first century U.S. policy. We have given massive support, including military, to some of the most authoritarian countries in the world and the worst abusers of human rights.

He needs to look objectively at the attacks on democracy and human rights in his own country.

Scott Bicheno has a response from Huawei

“This report, released by Professor Christopher Balding and Professor Donald Clarke, was based on unreliable sources and speculations, without an understanding of all the facts. They have not verified the information in the report with Huawei, and their conclusions are completely unsubstantiated. Huawei is a private company wholly owned by its employees. No government agency or outside organization holds shares in Huawei or has any control over Huawei.

“Through the Union of Huawei Investment & Holding Co., Ltd, Huawei implements an Employee Shareholding Scheme that complies with applicable laws and regulations. The Representatives’ Commission is the organization through which the Union fulfills shareholder responsibilities and exercises shareholder rights. As Huawei’s highest decision-making body, the Representatives’ Commission elects members of the Board of Directors and the Supervisory Board.

“In addition, the Commission makes decisions on important company matters, like capital increases, issuance of new shares, and profit distribution. Members of the Representatives’ Commission are elected by shareholding employees that have the right to vote. Daily operations of the Representatives’ Commission, Board of Directors, and Supervisory Board, including the selection of their members, comply with Huawei’s Articles of Governance.

“They do not report to any government agency or political party, nor are they required to do so. We welcome experts and researchers who have an interest in this topic to visit Huawei’s exhibition hall of shares and exchange their thoughts and ideas.”

Huawei’s response is slightly disingenuous. In China, the leading role is played by the Communist Party. Ultimately, every institution in the country, from Apple to Huawei, must answer to the government controlled by the party.

On one hand, companies must answer to governments everywhere. On the other, the Chinese government does play a more active role than most.

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