Committee of the key parts of the company in the United States to try to assess and manage and control risk and help support our overall ethics and compliance programs to make sure we protect huawei and our customers and we continue to do business and manage the cybersecurity risk. Host what is huawei legal and commercial status in the u. S. Right now . Guest is a moving target. National Defense Authorization act and we have rulemaking pursuant to executive order and right now we cant sell to the u. S. Government and cant sell to the u. S. Contractors and there is pressure for our small carrier customers of wireless and wireline customers to rip out huawei gear so there is legislation depending that would provide funds, not adequate or provide sufficient time that would give the money to rip out huawei equipment . Is a difficult situation and although not official u. S. Government has basically blocked the american carriers att verizon from selling our mobile devices. Host why do you think that is . Guest is a comp gated matter. We have geopolitical context of u. S. And china and the trade talks having exasperated things. We also have a situation that i think effects pretty good about us and our everyday lives where people dont want to hear or read anything that does not agree with their position so we have both information out there, some of it expressed by u. S. Government officials and some provided by the u. S. Government to the media but we cant meet with u. S. Government and we dont have the opportunity to provide the facts and its a challenging situation. Host they help us to do with those issues that huawei in the u. S. Government are facing so john hindle of politico is our guest reporter. Guest thank you for having me. I wanted to start with the obligations for huawei and operations and i know you said in the past theres about 1500 employees for huawei here but given these changes in the heat the company has gotten from whether its a Trump Administration, fcc, congress are those numbers going to change in the course of 2020 do you think . And your role, to. How will that shift as the government does block out the company a little bit . Guest we have been forced to downsize in the United States. We laid off about 600 people in our r d capabilities, primarily in Silicon Valley in california and cut down our staffs and carrier business and Enterprise Business and frankly when you look at our overall global revenues and Global Growth the United States from an income perspective is not a very important factor for huawei although the largest market in the market the world we would love to have a chance with the u. S. Government. Would you expect further cuts . Is there any sense of how that might change . Guest i dont know. Its probably more likely than not and will be additional cuts with the legislation pending that would provide funding to allow our 60 smaller customers to rip and replace huawei here and now would mean we wouldnt be able to provide the updates of software and hardware updates for technology that would cause a decrease in revenue, decrease in the workforce necessary to maintain business. The headwinds are definitely measurable for us. You mentioned the down going trade war and how that has overhang that influences what is going on here. We are now in 2020 and is a u. S. President ial election year. Has there been much discussion about whether a new administration might provide any reset or opening to discuss these issues in a different way . I found myself looking at the trade war and thats benefited to this issue of President Trump and hes seeking a second term but when things could potentially be different under a younger President Biden or warren or how much at this time specifically to end the Trump Administration and President Trump in particular do you think . Guest i think its important to understand the geopolitical context and that context exists regardless of which administration is in a power. U. S. Is quite concerned about china and the rise of china economically and militarily. It is concerned that some believe china wants to take over the world. There is concern about what is the american role in what is the american role with our allies and with u. S. Allies in creating and maintaining the capability that is necessary to keep us safe if china were to turn to become an actual kinetic warfare adversary. As we think of cyberspace, were building the Space Command and as we think about cyberspace indications of a growing dependency, by our country and others, on the digitized economies and 5g and internet of things and so forth means we will become increasingly dependent as a country and as a world on those kinds of technologies. That which really did not matter so much since i left the white house, over 15 years ago, it does not really matter. The question of how do you manage the risk to the United States regardless of who some suppliers are something that is top of mind whether youre a democrat or republican and the frustrating thing for me, as i alluded to, the fact the government will meet with us as there are information being communicative that arent based on fact. If the government is giving various publications or speaking public about things that are wrong, i can only imagine what theyre saying to both the democratic and repugnant leaders. Its important whether in our personal lives or government or geopolitics to base things on facts and on data and be objective. We understand the risk and take the steps necessary to address risk. Host but anti party, any we have a member of congress were have democrat or will begin we have asked them would you own a huawei phone and the answer across the board has been no. They dont trust it, they have information that says there is a back door and there is a way for china to access that informati information. Guest e began your comments with butts. Your comments agrees with what i was just saying that there is a democrat and publican are worried about china and many have said state Department Officials and others have said its not about huawei but about the china government and what the china government, in their view, forced huawei to do. We believe that, for example, Government People really talk to customers the government officials said huawei is giving our equipment away free to the customers but theres recent comment by government officials and attorney publicly basically comparing our founders offer to use the fg so government can use the software to elon musks tweet that got him and be big trouble with the sec calling his offer to license 5g technology to america the equivalent of a criminal fraud which is objectively, by any measure, completely false. Finally, another example of what has been said publicly as we update our equipment from china and government officials said that. That is demonstrably false and the bottom line is government officials dont hear this because theyre hearing one side of the story and not willing to listen to us or mother experts that say there are cybersecurity risks in the world and all the equipment, the carriers and the equipment have to be subject to strict scrutiny and testing of products and conformance of measures because the bad guys can hack into everybodys products with a Global Supply chain deeply embedded in china but those are the kinds of things that are necessary to make sure america is safe going forward. That is where the discussion needs to get to the next level. Host when you talk about the Chinese Government in the wall street journal recently was a support the wall street journal would credit facilities, tax breaks and other forms of Financial Assistance details for the first time how huawei had access to as much as 75 billion in a state support as it grew from a littleknown vendor of phone switches to the World Largest telecom company. Guest and it said comparing the 75 billion to 45 billion cisco is getting so lets put these in perspective and that is an example where the u. S. Government provided dramatically inflated information to the wall street journal for that story, way above the 75 billiondollar and the fact is and hopefully someone can show us information so we can have a chance to say that is right or that is wrong and the biggest item and there was over 45 billion. If you take that out were lowered then what cisco is getting around the world and others is the idea that Chinese Government backed banks providing loans to customers and lines of credit so the question is is that 45 of the 75 and is that the amount of money the customers borrowed arguably and basically alleging an artificially low rates giving unfair advantage to huawei because our customers would have lower cost plans but the fact is very few customers use the lands of credit. I cant tell from the article whether the 45 billion is theoretical lines of credit but we know only four, 5 billion over a major time. Of the ill get stuck but only 45 billion was used by customers and when youre looking at 150 billion in revenue four, 5 billion in loan support is nothing. When there isnt a discussion and people arent willing to think about or talk about the fact that i would suggest as we may have said in the previous interview block huawei if you must but lets do the things necessary to make American Allies safer and we are not doing those enough. That is the kind of thing that we are recommending. You talked about the issues with the administration not being open to speaking with huawei so what is lobbying looking like for the company at this point . I wondered whether whether it exists to members of congress and to what degree is a huawei lobbying operation like going into 2020 because numbers have been going up over the last year so what are those conversations and one of those efforts looking like . Guest e or more of an expert of what it takes to lobby and affect Public Policy and certainly some of our competitors were made significant campaign conservations to members of congress and we dont make such Campaign Contributions and that can have an impact on the discussion and there are some people on capitol hill that are willing to talk with us about the issues and we are going to redouble our efforts to reach out to them and try to have some of these discussions about what the facts and evidence are and frankly, from my perspective, i focus on is security and risk what is necessary to make america safer with the transparency. How much are you talking with the smaller Wireless Companies that you do work with . You mentioned around 60 or so, what have they been seen recently given obviously the Administration Others have moved to push out huawei room to rip out and replace the equipment and what is the message read from them . Guest they provided substantial input to the federal committee kitchens commission, both last year and this year and i believe they provided input to the commerce department. We are making a response to the executive order from last year and they told us some of their discussions with government that its quite clear that as i gave the example that some of the folks in the government think that we give our way our equipment free and some of our customers are telling the government they have particular measures they can use to help manage the risk whether from huawei equipment or nokia so those discussions are helpful but they said to the government of the efforts to do what they call rip and replace which is the pending legislation of coming up soon and this year that the amount of monies that have been discussed are not nearly enough in the timeframe that will take a lot more time and it is likely going to put some of them out of business. Host and the pretty, when you talk about rip and replace how much equipment is being used in the states right now . Guest im not sure i can give a number. We have 60 smaller suppliers about 40 and this is two, three, smallest carriers or internet and Wireless Service and about 40 of those are Rural America are underserved in america and its the smaller communities for the schools and colleges and companies depend on our technology in the service with these carriers to do business but its a relatively small amount of income but we are committed to helping to continue to support those rural customers if they are allowed to do that. Host huawei had a record year last year when it comes to record revenues. Guest we announced these figures on a summer 31 about 122 billion of about 18 but it is really important and people are misunderstanding the data and we definitely took a significant hit from the pressure from the United States government blocking the nearly 300 American Companies that we spent over 11 billion last year over 40000 working jobs depend on but despite that weve got we were at the Third Quarter mark up of 44 and the year and we were only up 18 and for a Large Company that is a lot. We have very substantial headwinds going into the next year in the economic environment is a challenge although its quite positive in the United States and the challenge of the competitive nature of the world and the changes taking place make the next year or two very challenging for huawei. Host and in fact in the yearend message you are rotating chairman eric writes that external environment is becoming more completed than ever and downward pressure on the Global Economy is intensified but in the long term the u. S. Government will continue to suppress the development of leading technology, a challenging environment for huawei to survive and thrive. Guest thats right. The environment is also very different around the world. More than 170 countries every country has its own environments. Every country has carriers and mobile operators that are trying to figure out what to spend their money on whats the business case. As we talk about digitized asian and 5g and clout in Artificial Intelligence block chain these other things that will make life better and create millions of jobs around the world but the companies will invest they have to see the business case. A lot of decisionmaking in the environments of individual countries around the world that will affect what they do and went and it affect our opportunities to grow our revenue and serve our customers. That yearend message that peter referred to he also said that survival will be our first priority. What would threaten the survival of huawei . Are there specific things you are worried about the good become bigger . The u. S. Market place is a smaller share but that was a line that did jump out at me, how x essential is this right now for huawei . Guest i think the challenge for how much we will grow and when is a real challenge. The situation with digitized asian around the world and the challenge of when you are in a competitive market people think we sell the cheap stuff and people buy our stuff because its cheap but thats not really true. We lose contracts every day. We lose on around the world and even lose him in china because china allows nokia to compete against us. We have to be competitive and meet customer requirements and sustain our growth and improve our capabilities as individuals and comedies and weve got to optimize the efficiency of our company. We got to get rid of dead wood and hold the frontline more accountable and drive progress. We are like any Major Company trying to meet the challenges of the world. Its impacted by the fact that these American Companies, most cant buy from us, no question. Its impacted by the fact that we cant buy from google. Coming up with a Huawei MobileService Alternative to google is a major priority to the company. And it is difficult and takes time. Not just to create the technology, but as you know, you got to test it. You have to test it and some things take time to read it like you cant have nine women make a baby in one month. Please take time and that will have an impact on our growth. Some of our growth between 19 was based on momentum from the past but the momentum is we will not get the growth in early 2020 that we had in early 2019. Is there a timetable for an alternative for what google provided at this point . I know huawei has talked up some of its own efforts along those lines but where is that internally right now . You talk about testing but when it comes to what google specifically authored where is that . Guest honestly i dont know what the timeframe is. I go to china for the meetings next week but i do know there is work with the App Developers who would provide apps critical part of replacing for our mobile devices we sold 240 million last year of creating the platform for the app so you have not just creating the infrastructure but to motivate the developers and give them what they need so they can start working in parallel but i dont know what the data is and its clearly a major commitment and very difficult. I want to turn to the recent fcc vote at the sec unanimously voted to bar u. S. Telecom providers receive subsidies from and working with while huawei and since then huawei has sued the sec over that that happened in november. What led you to go to court and what is your feeling in terms of prospects they are in the next steps . Obviously, they have a bit of regular tory challenge saying that huawei cannot challenge the determination that they are a threat but why go to what you see happening there next. Is a former attorney and federal prosecutor i have some sense of how sensitive the federal judges are to making comments on pending cases so i want to be caref