Christopher Balding

Fulbright University Vietnam

Donald C. Clarke

George Washington University Law School

Abstract

As Huawei has come under increasing scrutiny over the last several months, the question of who really owns and controls it has come to the fore. Huawei calls itself "employee-owned," but this claim is questionable, and the corporate structure described on its website is misleading. A number of pertinent facts about Huawei’s structure and ownership are in fact well known and have been outlined many times in the Chinese media, but the myth of Huawei’s employee ownership seems to persist outside of China. This article, drawing on publicly available sources such as media reports, corporate databases, and court cases, aims to refute this myth once and for all.



In summary, we find the following:



• 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.



• We know nothing about the internal governance procedures of the trade union committee. We do not know who the committee members or other trade union leaders are, or how they are selected.



• Trade union members have no right to assets held by a trade union.



• What have been called "employee shares" in "Huawei" are in fact at most contractual interests in a profit-sharing scheme.



• Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.



• Regardless of who, in a practical sense, owns and controls Huawei, it is clear that the employees do not.