USA telecommunications firms fear that partnering with Huawei by allowing it to sell their smartphones would anger the federal government and jeopardize future contracts.
A Canadian official said law enforcement took her into custody at the request of the USA, which is seeking her extradition for allegedly violating its sanctions on Iran.
Only minimal details are out yet, but as per some sources, she was arrested on December 1st in Vancouver and will have a first bail hearing on December 7th.
Lu Xiang, an expert on China-U.S. relations at the state-backed Chinese Academy of Social Sciences, said the arrest of Meng is "extremely shocking".
The SCMP obtained a transcript of an internal question-and-answer between Meng and her father, Huawei's founder Ren Zhengfei.
Canada on Saturday arrested Meng Wanzhou, Huawei's global chief financial officer, in Vancouver, where she is facing extradition to the USA on suspicion she violated US sanctions against Iran, the Globe and Mail newspaper reported on Wednesday. But hours later, Huawei released a statement on its official Weibo account, not only confirming the arrest but revealing more information. But if the transcript the SCMP obtained is genuine, the dialogue helps explain the background of Meng's arrest in Canada.
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The deal however did not go through and was called off in July this year, due to a roadblock created by Chinese regulatory bodies. China and the USA came to a limited agreement over the weekend concerning the ongoing trade war between the two countries.
Reacting to Meng's arrest, Huawei said in a statement it was unaware of any wrongdoing by its executive, adding it complies with all applicable laws.
The nationalist Global Times newspaper, in an editorial published Thursday, accused Washington of "maliciously finding fault with Huawei and trying to put the company in jeopardy with US laws". ZTE Corp., another Chinese technology company, almost collapsed due to US penalties for violating Iran sanctions before Trump rescued it following a request from Xi.
Huawei itself has been increasingly on the rocks with the U.S. for the past year.
"The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim", the diplomatic mission said in a statement.
United States media have also reported that Huawei is under investigation for potential violations of USA sanctions against Iran.
Huawei is one of the world's largest telecoms companies, and is the world's second-largest smartphone manufacturer behind Samsung.
Both Huawei and ZTE Corp. have faced trouble with the US and other governments over dealings with Iran and fears the Chinese companies' equipment might be used for spying.
It's also "obvious that Huawei and all related firms will fall under more severe inspection if they want to step into foreign markets", he said. The US, Australia and New Zealand have blocked the use of the Chinese firm's equipment in infrastructure for new faster 5G mobile networks. Three months later, the company eventually reached a deal with United States authorities by paying $1.4 billion in fines, as well as agreeing to overhaul its senior management.
The US sees Huawei and smaller Chinese tech suppliers as possible fronts for spying and as commercial competitors. Finance Minister Bill Morneau was recently in Beijing for meetings in which "the two sides reaffirmed their commitment to deepening and expanding the Canada-China economic and trade relationship".