Posted by: Bruce Einhorn on August 23, 2010
China’s biggest maker of telecom equipment is the subject of a new campaign by a group of Republican senators demanding the Obama administration investigate the company, which wants to sell equipment to Sprint Nextel. “Huawei has a concerning history,” write the senators (Bond, Bunning, Burr, Collins, Inhofe, Kyle, Sessions and Shelby), who go on to cite old reports about Huawei selling equipment to the regimes of Saddam Hussein and the Taliban. Oddly, the senators make just a passing reference to a dispute between Huawei and Motorola, writing that alleged Huawei violations of intellectual property rights “appear to have led Motorola to refuse to enter into a deeper business relationship with Huawei.” That’s a strange understatement by the GOP senators: Motorola and Huawei are now slugging it out in court; the U.S. company just last month sued Huawei for allegedly conspiring with former Motorola employees. Huawei says the complaint is “groundless and utterly without merit.”
How serious is this latest salvo from Washington? No Democrats signed the letter, and with the midterms approaching it’s easy to dismiss this call by Republican senators as a stunt to embarrass the Obama administration. For the GOP, it’s win-win: If Obama does nothing, Republicans can hammer the Democrats for being soft on China; if Obama intervenes, the Republicans can claim credit.
The company has been burned in the past. See its failed attempt to take over 3Com after politicians raised security concerns. Here’s a suggestion for Huawei, one I’ve made before: Open up. The senators write in their letter that the company’s founder and CEO, Ren Zhengfei, “was a member of the PLA” (the People’s Liberation Army, China’s military). Huawei says the company isn’t connected to the PLA, but clearly people in the U.S. have their doubts. Ren, who doesn’t give interviews, doesn’t help matters by being so secretive. If Huawei really wants to allay security concerns and make headway in the U.S., Ren needs to take some tips from experts in crisis PR, who generally coach execs to tackle problems like these head on. CEO Ren, you need to talk to the media. (Your PR folks know my number.)