A report suggesting that the Chinese military has hacked into German government computers could have a negative impact on the prospects in Western markets of Chinese equipment vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), believes an analyst at Dresdner Kleinwort .
The incident overshadowed German Chancellor Angela Merkel's state visit last week to Chinese Premier Wen Jiabao.
But the ramifications could go far beyond international relations and even damage Chinese companies' prospects for IT and telecom contracts in the West, believes Dresdner Kleinwort analyst Per Lindberg.
"The ability of Huawei and ZTE to participate in, let alone win, telecom infrastructure tenders in the Western hemisphere may have lessened considerably following last week's shock report," writes Lindberg in a research note issued Monday. "It could trigger a return to national security clearance when it comes to procurement of telecom networks," he adds.
But Heavy Reading chief analyst Graham Finnie is cautious about the potential impact on the likes of Huawei and ZTE. He says the effect on Chinese vendors will depend on whether this incident is a "flash in the pan" or turns into something bigger.
"There has always been an issue in the U.S. that these companies have links with the Chinese government. But it hasn't been quite so much of an issue in Europe," says Finnie. "This is another stick that people can use to beat the Chinese suppliers with."
"It clearly would not be in either company's interest to be seen to be working for the Chinese government," he adds.
But Dresdner says the spyware incident in Germany threatens to slow that momentum. "It could stifle China's telecom export push, trigger urgent replacement of 'unwanted' equipment, and put an end to price dumping tactics," writes Lindberg in his research note.
Grown-ups are supposed to form their views and opinions based on available information; children, loyal subjects and narrow-minded citizens willingly accept their parents' or their governments' views. What category do you fall into? Apparently, the latter: what you just demonstrated is nothing but labeling people (Stefan, in this case) based on cold war mentality and McCarthy's methods. Instead of discussing ad rem, you resort to brainless criticism ad personam.
Get serious. Use your brain. As Charles McCabe has put it: "Any clod can have the facts, but having opinions is an art."
Nobody, including myself, justifies the Cisco incident as part of the maturation process. What I stated was that virtually every company does it in order to find the easiest way to crack the door.
>> Stefan Sip: One can write a similar article, titled, "US policy in Iraq affecting Lucent/Motorola/Cisco in the Middle East."
No need do do that. The Chinese are already strong in both East Africa and in the Middle East. Check out "Huawei Wins Iraq Deal" ( http://www.lightreading.com/document.asp?doc_id=129665 ) and "Huawei Adds ME" ( http://www.unstrung.com/document.asp?doc_id=132611 ). What more is to be said?
I was wondering why no other companies are accusing Huawei of stealing. Actually Huawei is more successful in the telecom sector rather than the Cisco's router field. Have they stole all their stuff from E//, Lucent, ...? I doubt.
Stealing and copying can not be justified in the name of "maturation process". Copy hardware and steal software then sell it for cheap? This has been repeated in past by not one but several Chinese vendors.
In the maturation process of any company or society, what you have seen out of Huawei and ZTE are very normal. Think of Toyota in the ‘60s or Hyundai in the ‘80s. Were they not copying or accused of copying the best of American and European vehicles? They won primarily on price. Once they gained a solid foothold in the market, they started to innovate and improved on quality and customer service. In my opinion, Huawei’s history mirrors that of Toyota and Hyundai. Huawei started with a low-end PBX that was sold exclusively to remote parts of China. I read somewhere that in 2006, Huawei filed 4 times the number of patents compared to Cisco. I certainly don’t have any inside information regarding the Chinese government forced Cisco to drop the lawsuit. Perhaps Delphi or others can shed some additional light on this. Regardless, would this be similar to the fact that the US government, as a precondition for China to join the WTO, forced China, via China Unicom, to not only go CDMA, but must deploy x% from Lucent and y% from Motorola, while benefiting Qualcomm in the process.
Look, we are all grown-ups who are fully aware that we live in a complex world, where individuals, corporations, and governments charter a course for their own self interests. In my opinion, to single out China or Huawei/ZTE is very naïve and biased. For the billions of Chinese and tens of thousands of Huawei/ZTE employees who put in 15hr+ days, it is also very insulting. I recommend that everyone go and read John Perkins’ book, called “Confessions of an Economic Hitman.”
Lastly, the overall theme of the spying article is a bit silly. One can write a similar article, titled, “US policy in Iraq affecting Lucent/Motorola/Cisco in the Middle East.” Such an article can go on and describe how Muslims are disgusted with current policies, so much so that operators in the region are signing major deals with Huawei and ZTE, instead of NA vendors.
The blogs and comments are the opinions only of the writers and do not reflect the views of Light Reading. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
To save this item to your list of favorite Light Reading content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Digg
Del.icio.us
Reddit
