Huawei's Rep Repair

9:20 AM -- After pulling its bid to buy the assets of 3Leaf Systems Inc. , Ken Hu, chairman of Huawei Technologies Co. Ltd. 's U.S. business, released an unprecedented love letter to America, declaring the company's respect for the "values of democracy, freedom, rule of law and human rights in the U.S."

In Huawei's Open Letter to the US, Hu rolled out the American hero quotes. He handpicked choice phrases from Lincoln, Obama and stopped just short of including lyrics from Neil Diamond and Toby Keith.

Seriously, though, in the letter, Hu takes on several popular myths about the Chinese equipment giant, including its alleged ties to the Chinese military -- a myth we busted long ago. Hu also goes on to, in a pretty straightforward way, describe the process by which Huawei provides vendor financing to its customers, thanks to credit lines from China's commercial banks. Oddly, this bit comes off making Huawei sound like it does indeed have a funding spigot that other vendors lack.

Hu provides an idea of just how much the Chinese government does back Huawei for research projects. "In 2010, Huawei received a total of RMB 593 million (USD$89.75 million) of financial support from the Chinese government for our research and development activities. All of this is consistent with financial support that is provided to normal businesses in China and in many other countries, including the United States," Hu writes.

This all comes up because the Committee on Foreign Investment in the United States (CFIUS) expressed concerns about Huawei purchasing 3Leaf's technologies and, on Feb. 11, Huawei said CFIUS recommended that it withdraw its notice to buy the assets.

Huawei wanted to fight for its cause, at first, but then backed off after the publicity and potential hassle that would follow were deemed not worth the effort.

One bit of the letter is remarkable: "We sincerely hope that the United States government will address this issue by carrying out a formal investigation of any doubts it may have about Huawei in an effort to reach a clear and accurate conclusion."

Indeed, Huawei just asked for a formal US government investigation, which is not the sort of thing foreign companies do unless they are desperate to clear their name, totally sure they've done nothing wrong or are just completely insane.

I wonder what specifically the CFIUS saw that it didn't like and how carefully it vetted its information. I don't compete with Huawei in the market, but given its expressed "hope" of resolution through investigation -- and its open door to the U.S. to come over and, well, open more doors -- it's hard not to be swayed that the company is suffering from a reputation it doesn't wholly deserve.

— Phil Harvey, Editor-in-Chief, Light Reading

bollocks187 12/5/2012 | 5:12:04 PM
re: Huawei's Rep Repair

I could not agree more with you.


The problem is that the as a compnay think and operate very differently than Western corporations.

For example copying is allowed they do not respect the rules of the West and see no reason to adhere to patents.

FbytF 12/5/2012 | 5:12:04 PM
re: Huawei's Rep Repair

Huawei may not be the threat everyone thinks they are to national security but its clear the little fockers operate differently.  Their repeated, blatant attempts at trade shows to steal and or copy competitors products is not a mis-perception, its a reality. You are starting to see restricted access to vendors booths at the shows and its because of these guys and their sidekick ZTE. They need to learn to play by the rules the rest of the world plays or get better at cheating.   

DCITDave 12/5/2012 | 5:12:03 PM
re: Huawei's Rep Repair

Great post. I think we also have to give Huawei credit for owning its past. I do think Huawei has an adequate defense for the stuff they've been accused of and I do wish the gov't would be more forthcoming with its opinion.

Of course, the reality is folks are often in a purchasing position because they're good at mitigating risk. So I think that someone signing off on millions of dollars of equipment is well within their right to simply say to any vendor, "Sorry, I just don't trust you."

So how does Huawei tip the scales in their favor? Perhaps by being so price competitive that a purchasing manager would be nuts if he didn't consider them.

Seems like this cycle is likely to feed itself for a while, doesn't it?


[email protected] 12/5/2012 | 5:12:02 PM
re: Huawei's Rep Repair

I completely agree Quicktime.

Everything in Ken's letter is really true. Other thing, maybe it was not worth to write this kind of letter at all? People's minds change gradually and not quickly, and years of brainwashing's stuff will not pass overnight. Deeds change public opinion better than words.

Remember, what public opinion was about Japanese cars in 60's? Not saying about Korean. But now even Hyundai regarded as American brand and Toyota's brand sells itself.


quicktime 12/5/2012 | 5:12:02 PM
re: Huawei's Rep Repair

I don't think copying could create the 2nd largest telcom equipment provider in the world if we think using our head, instead of our foot.


If having any knowlege of telcom equipment, you will know nobody could copy

Juniper/Cisco's ASIC, nobody could copy Broadcom's Silicon; of course, nobody

could copy JUNOS/IOS.


I do think they lack of innovation and act as a follower. But in any industry, there is only one leader and many followers. You could not blame followers and say they are just copying. That is not decent and objective .

To solve the same engineering problem, we need allow different methods.

Respect your rivals and bet them is the better strategy rather than just complain.

billy_fold 12/5/2012 | 5:11:56 PM
re: Huawei's Rep Repair

Huawei already tried the price competition route back in 2001 - 2003.  Their OC-48 and OC-192 interfaces were less than half of any US competitor at that time and they didn't sell many of them.  Some things (like integrity), you can't give away and you can't buy.


Telecomguy0704 12/5/2012 | 5:11:56 PM
re: Huawei's Rep Repair

In the open letter, it mentioned about the army (PLA), but the fact is, in China, the Communist Party of China (CPC) controls everything. PLA is only an apparatus of the CPC. If one ever lived in China, one would know that most political/business deals and decision making process are opaque and shrouded in secrecy mode.



Other interesting links and articles about CPC, Huawei might be worth reading are shown below. 



“Primary Party organizations are formed in China's mainland enterprises, rural areas, government departments, schools, scientific research institutes, communities, mass organizations, intermediaries, companies of the People's Liberation Army and other basic units, where there are at least three full Party members.”


<h1 style="margin: auto 0in;">ACG Research on Huawei, Chinese business culture and the Art of War</h1>
<h1 style="margin: auto 0in;">http://searchtelecom.techtarget.com/feature/ACG-Research-on-Huawei-Chinese-business-culture-and-the-Art-of-War?asrc=EM_USC_13048542&amp;track=NL-854&amp;ad=804294</h1>
<h1 style="margin: auto 0in;">&nbsp;</h1>
<h1 style="margin: auto 0in;">ACG Research on Huawei vs. network equipment vendors </h1>
<h1 style="margin: auto 0in;">http://searchtelecom.techtarget.com/feature/ACG-Research-on-Huawei-vs-network-equipment-vendors</h1>
<h1 style="margin: auto 0in;">&nbsp;</h1>

Telecomguy0704 12/5/2012 | 5:11:54 PM
re: Huawei's Rep Repair

Sprint has a very good Network Security expert team and below is the outcome selection of their 4G network upgrade infrastructure vendors. To me, Sprint management team is truly visionary, as they have foreseen the potential problem ahead.

Report: Sprint excludes Huawei, ZTE from network project over security concerns


I believe that we have a right to be concerned and knowing that our communication network infrastructure is so critically important to our day-to-day lives.

How could we allow a PRIVATE company from a Communist Party controlled country (like China) to build and to influent/control our communication network infrastructure; especially, anything to do with the LTE/4G networks?

As they said "Vision is not seeing as they are, but as they will be.".

Stefan Sip 12/5/2012 | 5:11:52 PM
re: Huawei's Rep Repair

The words "Sprint" and "Visionary" should never appear in the same sentence unless there is a "NOT" in there somewhere.




spc_markl 12/5/2012 | 5:11:50 PM
re: Huawei's Rep Repair

Stefan Sip,

You are right about Sprint.&nbsp; It may have periodic &ldquo;visions,&rdquo; but in the end, it always follows Verizon.


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