Published: Thu, December 06, 2018
Markets | By Otis Pena

Canadian businesses face retaliatory risk after Huawei arrest

Canadian businesses face retaliatory risk after Huawei arrest

Canadian law enforcement has arrested Wanzhou Meng, Huawei's global chief financial officer, on the suspicion that she violated USA trade sanctions against Iran, according to a Globe and Mail report. The index was down for its third day in a row, after dropping earlier this week on concern over an economic slowdown in the United States.

In a statement on Wednesday, Canada's justice ministry said Meng was arrested in Vancouver on December 1.

Huawei's CFO, Meng Wanzhou, was arrested in Canada and faced extradition to the United States, a development that cast doubt on a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday.

Canadian Justice Department spokesman Ian McLeod said the U.S.is seeking Meng's extradition, but couldn't provide further details about the case because of the publication ban in effect at Meng's request.

"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng", the statement says.

That same month Washington barred Huawei rival ZTE Corp. from exporting US technology in a separate case over exports to Iran and North Korea.

Suspicions over Huawei's links to the Chinese government have made the company a target for suspicion and the United States has led the charge to ban its products and services. Meng...to face unspecified charges in the Eastern District of NY, when she was transferring flights in Canada.

In April, China appealed to the U.S.to avoid damaging business confidence after The Wall Street Journal reported Washington was investigating whether Huawei had violated sanctions on Iran. In October, the US said Belgium extradited a Chinese intelligence official accused of stealing trade secrets from USA companies - an unprecedented development. Huawei, which sells smartphones, has always been identified by the U.S.as a threat to national security.

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Huawei, now China's largest technology company by employees, with more than 180,000 staff and revenue of $93 billion in 2017, started off selling digital telephone switches in the 1990s.

Huawei derives around half of its revenue from supplying equipment to telecoms carriers around the world.

It also produces consumer electronics and this year overtook Apple to become the second-largest manufacturer of smartphones in the world, behind Samsung Electronics.

"What makes Huawei important is that it is a leader in developing technologies that will make China less dependent on US or European suppliers", he said.

In a response, ZTE denied the charges while Huawei insisted it "posed no greater cybersecurity risk than any ICT [Information and Communications Technology] vendor".

Other countries, such as Australia and New Zealand, have also followed the case.

The arrest of a Chinese telecom executive in Vancouver is renewing fears of the communist government's ties to the cellular network giant.

A user of China's Twitter-like Weibo platform said Chinese should boycott products made by USA tech giant Apple Inc and instead buy Huawei products to show support for one of China's national champions.

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