Huawei asks for US probe to dispel “untrue” concerns

On 02.28.11, In Mobile, By Editor

China’s telecom giant Huawei issued an open letter on Friday saying it welcomes investigations from the U.S. government, if that could dispel misperceptions about the company.

In the announcement posted on its website, deputy chairman of Huawei, Ken Hu, said he regretted that the “long-standing and untrue rumors and allegations” in the U.S. had stymied Huawei’s normal commercial operations in that country.

Huawei this week dropped the acquisition of an insolvent American firm, 3Leaf Systems, after “national security concerns” reportedly prompted the Committee on Foreign Investment in the United States (CFIUS) to discourage Huawei from completing the agreement.

Huawei has long been badgered by the claim that it is backed by the Chinese government, an accusation that has exerted ruinous effects on the company’s acquisitions of foreign companies.

In 2008 and 2010, similar concerns blocked the Huawei buyout of 3Com and a network business of Motorola , respectively.

“We sincerely hope that the United States government will carry out a formal investigation on any concerns it may have about Huawei,” Hu said in the letter, adding that the probe would only prove “Huawei is a normal commercial institution.”

In the letter, Hu argued that the allegation of Huawei’s ties with the Chinese military has centered on the contortion of the fact that Huawei’s chief executive, Ren Zhengfei, once served in the People’s Liberation Army.

“Mr. Ren is just one of many CEOs around the world who have served in the military,” said Hu, noting that Huawei is a civil-use telecom solutions provider and has no involvement in any military technologies.

Further, Hu denied that Huawei had received improper financial support from the Chinese government, saying the tax incentives it receives are similar to those that the U.S. gives to its high-tech companies.

Established in 1988 in China’s Shenzhen special economic zone, Huawei Technologies Ltd. now stands as a leading telecom and network equipment provider that has sold products to over 100 countries.

Huawei, earlier this week, confirmed it had bid for the phone network installation for the London Underground.

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Huawei aborts US security challenge (China, US)

On 02.21.11, In Mobile, By Editor

Huawei, the Chinese telecom equipment maker, has dropped its challenge to the US government over a deal  in which Washington had refused to give national security clearance to the company.

The move is the latest twist in the increasingly dramatic conflict between Chinese companies’ global expansion and some governments’ suspicions that allowing them in could make countries vulnerable to hostile action from an ever more powerful China.

According to the company, this was a difficult decision. However, they have decided to accept the recommendation of the Committee on Foreign Investment to withdraw their application to acquire specific assets of 3Leaf.

The statement is a surprise about-turn from its insistence, just four days earlier, that it would not voluntarily unwind the $2 million acquisition of patents from 3Leaf, a small US company, made last May, as proposed by Cfius, the secretive executive agency which screens foreign investments in the US for national security risks.

Huawei’s refusal, which would have forced Barack Obama, US president, to personally make a final decision on the deal, had stunned observers because most companies choose voluntary retreat when Cfius indicates that a planned deal could face rejection.

Mr Obama would have had to decide on the deal within 15 days.

It is the latest episode in Huawei’s long-running efforts to expand in the US. In 2008, the company abandoned a planned acquisition of 3Com, a US router and switch maker, after Cfius indicated that it was not ready to approve the deal.

Since then, the company had communicated with US officials, lawmakers and analysts, hiring former American government officials and industry executives and committed to unprecedented outside security checks of its products.

The measures have done little to allay suspicions about the company. US lawmakers and analysts continue to harbor the view that Huawei could be a front for the Chinese military because Ren Zhengfei, its founder, is a former People’s Liberation Army officer. Huawei denies the allegations.

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