Well, staffing a european subsidiary with european engineers tends to make sense.
Now why do companies in general have R&D centers outside of their headquarters? The Chinese are far from being the only ones. This is a widespread thing. There are myriads of big US companies doing exactly that. Part of the reason may be to get an easier access to the local market. Another reason is to make the company's culture more diverse (in hopes that this would improve the overall creativity and skill level). Yet another is to cut costs. You'd think that Huawei would not do it for this one reason, but we don't have the whole picture. That may still be cost-effective for them due to a number of reasons...
Well this may not be the only reason. I had worked with Texas Instruments for over 17 years as a hardware apps engineer and had interacted with many engineers from Huawei China and from other engineers from EU. There is a big difference in the knowledge, working style and quality of work.
Most engineering teams from China do not look into the fine details of the individual block. For e.g. if they are making a cellphone, they would put the whole system together first and then verify as a whole. If it works fine, then they dont even bother to look at each block. Just assume that everything is working together, so each block should be fine. They will not care if the power supply block has higher ripple than the calculations, or that the noise figure of a block is higher than expected. I was very much frustrated supporting many such customers because they don't challenge you back.
At the same time I had the chance to work with the engineers at Ericsson in the EU. Those folks would take the ICs from Texas Instruments, (multiple of them would go to make a cellphone), test each and every block for its individual performance. Then they would put the whole system together and test it again. 99% of the time, the system would work fine as the small blocks are designed and verified to perfection. This is a much better engineering approach which makes reliable products.
The first approach is faster and can get things to the market at a fast pace, but the 2nd method is what makes products long lasting and reliable.
This is my first hand experience working for a big semiconductor company supplying components across the world. The engineers in the EU are more expensive and they put in lesser hours than those in Asia, but in general the quality of work in the long term is way better.