05 December, 2012

Huawei and US


It's been a bit of quiet lately and I know that this is old news, but I still need to voice my opinion

One thing that I have thought about a bit is Huawei's alleged ties to the Chinese government and thus disqualifying them from delivering to US operators - with the suspect argument of being government spy..

The logic being .. Well, I can't follow the logic. The only way the logic would work is if Verizon, AT&T, Lucent (now Alcatel-Lucent), Bellabs, Tellabs, Cisco, Juniper and others would act accordingly and act as spies for the US Government. Could that be the case?

David Wolf, who runs Wolfgroup Asia, has made an excellent analysis - and he should know. He has probably spent more time studying these companies than even I have done in the past. Read his report here

From my point of view, I did a serious in-depth study about Huawei in 2003 and has since followed the company and there are no real ties to the government. There are unofficial ones, as e.g. many contracts have been awarded to Huawei in China due to local tight relationships - but those are not substantially different from what both Ericsson and Motorola has.

On a national view, Huawei has got less government support which definitely undermines the argument of being a prolonged arm of PLA. The only real affiliation is that Ren Fei, CEO and founder, is an ex-PLA officer - but that was more than 30 years ago. 

Notably, ZTE is the company that enjoys preferential government support in deals where China can flex muscles. They have also in the past had better financing support but lately it seems like Huawei also can enjoy the 'free' money, which is one of the Chinese companies strongest advantages vs companies stuck under quarterly report and boards with little endurance.

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