Huawei: China’s hi-tech giant to open £125m centre in UK

Chancellor glosses over security fears on access to communication systems by Huawei

George Osborne and Huawei CEO Ren Zhengfei appear relaxed about doing business with each other (Getty Images)

George Osborne has announced that controversial Chinese technology giant Huawei is to open a £125m research and development centre in Britain.

The Chancellor has defended the firm during his five-day trade mission to China this week, saying that Britain would keep its door open despite the reservations of other Western countries over security implications.

There has been mounting concern on both sides of the Atlantic over the potential threat stemming from Huawei’s access to communications infrastructure.

Earlier this year Parliament’s influential Intelligence and Security Committee issued a damning report into a multibillion-pound deal between the Chinese company and BT, saying it should not have been allowed to happen without the knowledge and scrutiny of ministers.

Huawei, the world’s second-largest telecoms manufacturer, has denied it has links with the Chinese government or military and has said it receives no financial support from the Chinese state.

Mr Osborne glossed over the fears as he pledged to open up “e-trading” routes yesterday in a bid to make the most of China’s rapidly expanding tech market.

“China’s growth in hi-tech industries is a huge opportunity for Britain – we have some of the most innovative tech companies in the world and China offers them a huge export market,” he said on a visit to Huawei’s global HQ in Shenzhen.

Earlier this week, Mr Osborne dismissed security concerns and said that Britain should build on its relationship with China in the field of technology.

He said: “One of my tasks this week is to explain to the British people just how far China has come, how sophisticated your businesses are, and how advanced you are in the fields of hi- tech and science.

“There are some Western governments that have blocked Huawei from making investments. Not Britain. Quite the opposite. That is why I was pleased to welcome Huawei’s opening of a flagship office in our country in June, and of £1.3bn of investment that came with it.”

Boris Johnson, also on a trade trip to China, said yesterday he understood why there were concerns over Chinese tech firms having access to the UK’s telecoms infrastructure.

But he suggested the risk was worth it. “The French spy on us. Everybody spies on us. On spying you can put up firewalls, you can make sure you have proper due diligence, but that’s no reason not to have conversations with companies like Huawei at all,” he said.

Several members of the Chancellor’s tech delegation have suggested privately that the risk of security breaches was worth taking if it meant gaining a foothold in the market.

Huawei’s R&D centre will create more than 200 jobs in Luton, while Rekoo, a leading social gaming company, will be the first major Chinese tech company to set up in London’s Tech City.

The firm has more than 15 million daily PC gamers and 10 million smartphone gamers, giving it a huge reach.