Huawei and some very sour grapes

Apr 29, 2013

In Aesop's ancient fable a hungry fox tries and tries again to snaffle some beautiful, ripe, sweet, low-hanging grapes dangling from a vine. However, they are just too high for him to reach and after wearing himself out jumping up and down and performing various acrobatics and contortions, he finally gives up and slinks off saying "I don't care, they're probably sour anyway."

And now, more than 2,500 years after the story was first committed to writing, the Chinese comms equipment manufacturer and vendor, Huawei, has followed Aesop's script more or less to the letter. After years of concerted attempts to convince the US government and authorities of its independence and business bona fides, Huawei's executive vice president, Eric Xu, now says, "We are not interested in the US market anymore. Generally speaking, it's not a market that we pay much attention to." Yeah, right.

Huawei has been under intense government scrutiny ever since it first began its campaign to elbow its way into the US market. The American authorities were, rightly, concerned about the company's close links to the Chinese government and asked US companies not to do business with an organisation whose founder was a former officer in the People's Liberation Army and who, it is believed, remains subject to the political and economic control of the Party apparatchiks in Beijing.

A somewhat more junior Huawei spokesperson, Jannie Luong, has provided a rather more rational rationale, saying that Eric Xu's "I'm taking my ball home" stance simply "reflects the realities of our carrier network business in the US." And, given the antipathy the US authorities have towards Huawei and its kit, "it would be very difficult for the US market to become a primary revenue source or a key growth area."

That said, Huawei, with US headquarters in the picturesque burg of Plano, Texas, has, on the one hand, announced that it will not be making any redundancies in the US whilst, on the other pointing out that "like any other company, we will scale our operations according to the current market opportunities." It also adds that it will continue to sell its equipment in the US in all three of the business sectors in which it currently operates; Carrier Networks, Device and Enterprise. All very inscrutable.

Huawei's star plummeted to earth in the US on suspicions that the company's close links to the ruling Communist Party in China could be detrimental to the national good. A report from the House Permanent Select Committee on Intelligence recommended, in October last, that the US block acquisitions and mergers involving Huawei (and the other major Chinese comms equipment maker, ZTE) and avoid using equipment from the two Chinese companies.

The House report concludes that both Huawei and ZTE are "credible security threats" to US interests and adds "The United States should view with suspicion the continued penetration of the US telecommunications market by Chinese telecommunications companies."

The most damning allegation in the report is that Huawei actually provides "special network services" to a secret cyberwarfare unit of the People's Liberation Army. This contention alone was enough to ensure that Huawei equipment be 'pre-selected out' of consideration for a variety of major US infrastructure projects.

Huawei described the report as "little more than an exercise in China-bashing" while the country's Minister of Commerce, Chen Deming, railed against the accusations in the report, describing them “outrageous” and reminiscent of a “Cold War mentality”. “If you treat me like a Trojan horse, how do you expect me to respond?"said Chen. Nay, nay, don't be like that.

Putting the bluster and rhetoric to one side, the US government plainly believes that Huawei and its ilk pose a potential threat to the national security of the US - mainly because of the tangled skein of secretive links both companies have and maintain with the Chinese government and some of its shadowy agencies. It is unlikely to abandon that stance anytime soon and so Hauwei, in an effort not to lose all face, is now pretending that it never really wanted to be in the US at all. So there! Yah! Boo! Sucks! and I don't care!

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