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Huawei CEO says not surprised by U.S. spying reports

Huawei CEO and founder Ren Zhengfei walks inside Huawei's headquarters in the southern Chinese city of Shenzhen, Guangdong province, in this
Huawei CEO and founder Ren Zhengfei walks inside Huawei's headquarters in the southern Chinese city of Shenzhen, Guangdong province, in this

By Paul Sandle and Jane Barrett

LONDON (Reuters) - The founder of China's Huawei Technologies Co Ltd said media reports that the U.S. National Security Agency (NSA) was spying on his company came as no surprise, and they would not damage its reputation among its customers.

The New York Times and Der Spiegel reported in March that documents leaked by former NSA contractor Edward Snowden said the U.S. agency accessed servers at the company's Shenzhen headquarters to obtain sensitive data and monitor executives' communications.

"This monitoring behavior of the United States is within expectations," Huawei's founder and chief executive, Ren Zhengfei, told reporters in a rare meeting with the press in London on Friday. "It has just been proved."

He added it was not just people in the United States who would be interested in the activities of the group, which he has built into the world's second-largest telecoms equipment maker and third-biggest smartphone manufacturer.

But Ren said the reports would not damage the firm's reputation with its major telecoms customers in Europe and Asia in terms of the security of its products.

"The business we are doing with our customers is built on a mutual understanding between our customers and ourselves over the last two to three decades," he said. "Therefore, those things going on will not, I believe, have any impact on doing business with us.

"It is not necessary to believe this has a heavy burden and I believe it will pass some day."

The surveillance reports came as an embarrassment for the United States because lawmakers in the country have often voiced security concerns about Huawei's networks, effectively shutting the Chinese company out of the U.S. telecom gear market.

The U.S. opposition to the Chinese company, in part stemming from Ren's background in the Red Army, has left the market to Ericsson, Alcatel-Lucent and Nokia Siemens Networks.

Ren said his low profile with the media - due to shyness - had contributed to Huawei's reputation as a mysterious company. But he has increased transparency and financial disclosure, he said, and there was little else he could do to change minds in the United States.

"There is not a direct linkage between being transparent and getting access," he said. "It might take 10 or 20 years for the United States to know Huawei is a company with integrity. We may have opportunities then."

In the meantime, Huawei would not waste too much energy on the U.S. market, and would instead increase investment in other areas like Europe, where its technology had been welcomed.

Ren, who set up Huawei in 1987, also ruled out a stock-market listing, at least for the rest of his tenure, saying the move would not help the business.

"Shareholders are greedy - they want to squeeze every bit of the company as soon as possible," he said. "I think that's part of the reason Huawei could catch up with, and overtake, some of our peers in the industry."

Ren, who spent his early years in a remote mountainous town in Guizhou Province, said he experienced the sharp end of capitalization when he was discharged from the army and moved to Shenzhen to set up his own company. He lost money in early deals, and he concluded the market economy was about cheating.

But he said he realized he could control the quality of the products he made, a philosophy that persists in Huawei today, and which has helped create a group with revenue of $39.5 billion last year.

To encourage loyalty and dedication, Huawei's 150,000 employees are shareholders, Ren said, an approach which would help the group double revenue by 2018.

"Huawei's employees are also the owners," he said. "This creates a very strong drive to boost the development of the company.

Ren said his focus on building a business and making money had left little time for hobbies, or opportunities to develop any bad habits like smoking or drinking. His one sadness, he said, was not being able to "fulfill the feudal obligations to his parents".

Surveying a business whose equipment is in technology deployed in more than 500 wireless networks serving billions of people today, it must be only a small regret.

(Editing by Larry King)

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