GOP Senators Go After China's Huawei

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.)

Reader Comments

SpockV

August 24, 2010 12:26 AM

This works both ways! The Republicans must expect the U.S. companies to get the same treatments in China (:-

2Bob

August 24, 2010 2:37 AM

It is not just Motorola that has had patent problems with Huawei. Cisco is another company to complain about the endless ripoffs of their technology.

The ironic situation is that Huawei seem to have recently found god and are filing a substantial number of patents. How bizarre and arrogant that this company should expect any of its patents to be respected when they, with the tacit approval of the Chinese Govt, have imply ignore the patents of others.

Yes another situation when western countries have let their legal frameworks convey a one sided advantage to the Chinese. These guys would sell their mothers if it meant an economic advantage.

XY

August 24, 2010 3:38 AM

Huawei, known for high-quality and low cost, shouldn't bother about the US market. A market that excludes Huawei's participation will exact a much higher cost on the Americans than it otherwise might. It is definitely in China's long-term interest to see American infrastructure built on excessive expenses. Huawei just needs to make sure that US telecom firms are treated in China the same way as it is in the US. China's will be a far bigger market for the telcos than the US anyways.

Manontops

August 24, 2010 10:49 AM

Huawei has gotten so good in this business that they have taken significant market share from Motorola and Alcatel-Lucent in emerging markets. I have dealt with Huawei before and sat through their presentations. They worked with leading western companies and consulting firms to develop their corporate policies and a tour of their facilities in China will make you understand what has made them so successful. I hope Motorola is not engaging politicians in the US to harrass Huawei out of the US market. That will be a fall from grace for a former US powerhouse. I also hope that as the debate progresses, people continue to see it as a matter between two companies and not a matter between a US company and a CHINESE company.

Husin O' Bama

August 24, 2010 11:30 AM

There is a perception that only Western companies are discriminated in China, why US is a level playing field.

swoosh

August 24, 2010 11:42 AM

If the US start aiming at Huawei, how about China retaliate by aiming at Dell? sounds good to me, tit for tat.

Kevin

August 24, 2010 11:47 AM

US is a country with a great numbers of talented engineers, scientists, entrepreneurs, pioneers...etc. But US law makers are the most stupid & selffish. They are very smart in making their own fames and benefits but not for the American people.

jose

August 24, 2010 12:40 PM

I strongly suggest China and Chinese companies avoid dealing with U.S. companies just to avoid the nonsense. United States congress does not understand macro-economic and business. Politics is their major concern. Gradually this country is painting itself into the corner, retreating politically and economically. Meanwhile there is a big world out there, Canada, Germany, UK, Australia, continents of Africa and South America, Russia, etc, is waiting in line to increase trade. The near-sightedness of people in power is just amazing.

nothing

August 24, 2010 2:37 PM

it's totally non-sense!

Taishan

August 24, 2010 2:46 PM

I tend to agree with the author on this one. China needs to begin developing and exercising her PR skills. This is vital if she is to put the US (and the Western world) at ease about her rise. China has an oversized influence for her GDP (she just surpassed former No. 2 Japan) and is about 40% the size of the US. The next 10 years, I'm convinced, will match America's GDP, but her economic impact on the rest of the world will likely be greater. This level of influence will naturally raise fears, however unfounded they are. People are both logical and emotional creatures. While many fears about China are overblown (and quite significantly), China needs to learn to address those fears that are a natural response of people because of the emotional side of human beings. The sooner China realizes that is one of the job descriptions of a rising super power is PR, the easier it'll be for everyone.

Gromoso

August 24, 2010 3:34 PM

Is China the only government who have dealt with reproachable regimes? How many former US Generals have jobs in the Defense and contracts armaments industries? As for the PR front, how many of US generals working for the big contractors are giving interview of their firm arms sell?

Haroon Rashid

August 24, 2010 4:33 PM

Huawei's success envy competetion. With their growth graph in the international market which was not duplicated in North American markets, Ren Zhengfei should take a serious concern on lack of lobbying of Huawei not only in the US, but have strong presence at WIPO in Geneva, to clear the world community minds. I had observed Huawei engineers in the forefront of R&D., at ITU forums on standardisation, hence they deserve success. If Huawei withdraws from the US market the US onsumer suffers by paying higher prices for the services which they probably had. Mr Ren Zhengfei, same thing happened with the shy Toyota chairperson. When he made public appearance to the international media, accepting his failure things are lot better. Americans still Toyota, because Toyota listens to the cues of the consumer. Ren Zhengfei you should listen to the consumer, and come to the TV screen.

No lobbyist left behind

August 24, 2010 4:39 PM

Which lobbyists just contributed to these GOP senators' campaign fund? Motorola's? Cisco's?

Ks

August 24, 2010 8:35 PM

If you want to tear down Huawei, the best way is to investigate its corruption doing business.

roger

August 24, 2010 9:03 PM

I dont know why our companies continue to buy from these leeches. They steal our technology, They send their spies into all areas of our society, Ignore our patent laws, make countless numbers of knock off goods. Cheat, steal, lie.

Shame on Sprint. SHAME. Buy American. Stay away from these Criminals who violate every tenent of fair trade.

@roger

August 24, 2010 11:16 PM

Roger, what every tenent of fair trade were you taking about?

Yeah, you give a crap about fairness but you have no qualm giving peanuts to developing country workers to do a job. The amount of peanuts is so degrading even you won't pay your sister to wash the dishes.

Jack

August 24, 2010 11:26 PM

What a bunch of cold-war dinosaurs who are too impotent to solve their own domestic problems trying to look for foreign scapegoats instead. Consider all those dimwits who think Obama is a Muslim, there will be no lack of stupid audience.

Security concerns? Yeah, be scared! We have put eavesdropping device into every TV settop box, modem, router, switch, phone... every gadget to be precise. Better open them up and check! Insecure morons.

Henry l.

August 25, 2010 1:17 AM

Yes if Huawei want's to do business in America it must play by American rules and kiss American behind. But the funny thing is that recently American (GE) and European (Seimens) openly grumbled/complained that the Chinese government are making their business in China difficult. The moral of the story is that if Chinese companies want to do business in America, they must bend over and take it any which way and if American companies go to China, the Chinese government is suppose to also bend over. Americans/Europeans are going to have a rude awakening.

Saul

August 25, 2010 4:31 AM

American media and business always like to portray the Chinese investment environment as protectionist and hostile to foreign businesses. THEY AIN'T SEE NOTHING YET. These people must have never experienced the discrimination and hostility that Chinese companies faced when doing business in America. From prospective investments in UNOCAL to 3M, to the recent political hysteria concerning a small investment by Chinese steelmaker Angang in a MINORITY stake steel venture in Mississipi, America exemplifies what a protectionist and hostile business environment really looks like. Maybe that's just what Americans have gotten used to as the world's sole economic superpower, but such hypocrisy and double standard can only backfire as the table turns. At a time when GM already sells more cars in China than America while making big profits in China but losing its shirt selling cars in America; when American companies ranging from Walmart to GE, Caterpillar, Boeing, Yum Brands, MacDonald's, Starbucks, Coca Cola rely on China as their largest and fastest growing foreign market, when America has become the world's biggest debtor nation while China is the world's biggest creditor, such hypocrisy can do America no good. Chinese companies can just skip America as an investment destination while China can make sure that American companies operating in China get the same cold shoulder that Chinese companies get in America.

outofhere

August 25, 2010 6:03 AM

China, just shut these arrogant hypocrites out of your own market. Americans are midgets in telecoms anyway. You don't need them. You don't have to put up with this.

Maersk

August 25, 2010 6:04 AM

To Roger, another typical American BS artist, I just want to remind you that you forgot to mention the Chinese have also stolen your virginity.

Maersk

August 25, 2010 6:10 AM

America is the biggest Demo-of-Crazy in the world and is run by a bunch of BS artists/jealous freaks.

obsthetimes

August 25, 2010 9:07 AM

None of the comments acknowledge the fact that Huawei has violated Motorola patents with the tacit approval of the government. IP is simply not respected in China.

Stone

August 25, 2010 11:13 AM

America is no longer hungry.

jose

August 25, 2010 2:22 PM

I must agree that to strive for a leveled playing field is noble, but I believe that there is a deeper element to this situation, i.e. racial discrimination. Way back in the 80's, Japanese companies had difficulties acquiring NY, LA real estate and Monterey area golf course. It seemed to me that this country prefers 'eurocentric' companies from Europe, Canada and Australia but loves to create problems for Asian companies as a whole. Imagine what the response would be if Gulf of Mexico crisis was not created by BP but say Huawei, the conspiracy theory would definitely be spread by western media.

US

August 25, 2010 6:06 PM

Ha... Just only mention "was a member of the PLA" ( the U.s always good on that since she was born ) the dream of any Chinese's investors to stay in America certaintly doom!
The Chinese only can do is that ; if you can beat them ; joint them; give up the nuke,; let the U.S take care the defense and yes to all the U.S demand then you wil be rich and prospers like Japan and Korea. They would not have chance to learn the west technology!

CompEng

August 25, 2010 6:11 PM

I love how asking Chinese companies to be transparent and follow local law is stupid Xenophobia. Meanwhile, asking China to open up, say what the rules will be, make them fair, and actually following the rules, is stupid interventionism.

And of course, any time someone stands up to China on any issue whatsoever, they're not showing proper deference to China's sovereignty.

Security concerns are valid. China (and America) have been caught multiple times strong-arming local companies into bugs and back doors in different devices, and China's cyberwar achievements are no joke.

Don't get me wrong: America's political scene is childish, short-sighted, and bears multiple personalities. But ignoring that China is interested in China first and concepts like fairness, charity, or the rule of law only when they don't conflict with priority number one is just common sense.

NOchoise

August 25, 2010 8:41 PM

HA...The only thing Chinese can joint the market in U.S is to follow two other countries; Japan and Korea;give up the nuke. and let the U.S take charge for thier defense; Then The U.s do not need to say" “was a member of the PLA” ...beside; Japan and Korea are benefit from U.S 's advance technology and persper!!!

Taishan

August 26, 2010 9:21 PM

China is a paradigm changer. The view of the world is going to look very different in 2050 than today. And the future generation of Americans will look at Chinese presence the same way they see British presence today, i.e., part of the American landscape. Until then, there will be painful adjustments. The West will continue to portray China with an alarmist view, and China will have to be patient and learn to develop skills on how to communicate her intentions. The reality is, China is entering a part of the world that is acustomed to being the economic center of gravity. But that center of gravity is shifting East. As the center shifts East, so does the weight of political correctness.

@CompEng

August 27, 2010 12:20 AM

CompEng: You think the US doesn't spy on China also? But unlike what the US did to Huawei, China does allow Cisco to sell a lot of stuff to Chinese telecom operators. So what, if the founder of Huawei previously has military experience? It is extremely common for American business leaders to have previous military experience too. Should foreign countries also ban American companies they work for to operate there? Is that not paranoia if foreign countries apply the same set of rules to American companies? Do you still not sense the hypocrisy and double standard?

Hypocrisy exposer

August 27, 2010 4:29 AM

Notice how this topic has been removed from the Featured Asia Bloggers section in the Asia home page as soon as Americans found they're on the losing side of the argument. More American hypocrisy...

Democracy First

August 27, 2010 11:01 AM

America needs to wake up to Chinese tactics. Chinese migrant laborers work long hours to flood the world with cheap clothes, shoes, toys, and electronics. The profits from those industries will then be used to compete with America in telcomm and other industries. The best way to deal with this is to put quotas on the shoes, clothes, and toys coming from China. There are lots of other poor countries that will be happy to supply those goods to America and probably will treat their workers much better and will not threaten America’s interests (North Korea, Taiwan, etc.).

Democracy First

August 27, 2010 11:05 AM

America needs to wake up to Chinese tactics. Chinese migrant laborers work long hours to flood the world with cheap clothes, shoes, toys, and electronics. The profits from those industries will then be used to compete with America in telcomm and other industries. The best way to deal with this is to put quotas on the shoes, clothes, and toys coming from China. There are lots of other poor countries that will be happy to supply those goods to America and probably will treat their workers much better and will not threaten America’s interests (North Korea, Taiwan, etc.).

kinder

September 5, 2010 11:44 PM

They formed with arch western companies and consulting firms to advance their accumulated behavior and a bout of their accessories in China will accomplish you accept what has fabricated them so successful. I achievement Motorola is not agreeable politicians in the US to harrass Huawei out of the US market. That will be a abatement from adroitness for a above US powerhouse. www.powerlinebattery.com

Post a comment

 

About

Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

BW Mall - Sponsored Links

Buy a link now!