Huawei's long march to the US

02 Nov 2010

It won’t get easier for Chinese vendors battling to open up the US market.

With the US political season at its climax, three senators and a congresswoman have reportedly called on the FCC to impose restrictions on ZTE as well as Huawei.

While Huawei, whose CEO Ren Zhengfei is a former PLA officer, has long been a popular target in the US, the focus on state-owned ZTE is new.

The two Chinese vendors are on a shortlist of six for Sprint Nextel’s LTE network tender, due to be announced in the coming weeks.

Former vice-presidential candidate Senator Joe Lieberman and three others wrote to the FCC on October 19 warning that Chinese-branded equipment would be vulnerable to manipulation by the Chinese government.

It’s not a whole lot different to the Indian government’s concerns which, like those of the Americans, appears to be driven as much by politics as genuine network security fears.

Huawei, which has been trying for nearly a decade to get its US business off the ground, has hired high-powered Washington lobbyists to press its case. Doubtless it has pointed to the billions of dollars of business that Alcatel-Lucent has done in China in the past 20 years.

Unfortunately, companies bearing the China brand these days have few friends in US IT and telecom. They have a long list of grievances.

China’s telecom gear market might be open to foreigners, but the services side market is effectively closed, despite China’s WTO commitments to the contrary.

US firms are increasingly vocal about the protectionism in China’s indigenous innovation program; from local standards like WAPI to the abortive Green Dam filter and the intrusive requirements for government procurement deals.

Google walked out of China after what it said was an attempt by Chinese hackers to steal its company secrets.

The US last month complained to the WTO about Chinese state subsidies to cleantech firms.

And foreign firms continue to receive little protection against software and even hardware piracy in China.

In this environment, politics will trump economics. ZTE and Huawei will need all the lobbyists they can get.

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