No surprise as Bain, Huawei give up on 3Com

25 Feb 2008

The abandonment of the Bain-Huawei bid for 3Com is no surprise, though it's no less regrettable because of that. Despite brave words from Huawei about pressing on, the deal is dead in the water.

The reasons have nothing to do with telecommunications and little to do with Huawei. Admittedly, the highly-secretive firm is sometimes its own worst enemy; its ownership and financing are shrouded in secrecy, making it is easy for its critics to paint it as a PLA-influenced operation.

But this is just the latest of several Chinese deals that have been knocked back in recent years by Washington protectionism and paranoia. It was doomed from the start.

For those who believe that open markets benefit business, consumers and economies alike, it is just more bad news. Inevitably, there will be a Chinese tit for the US tat.

Back in China , the task of foreign carriers and VAS companies trying to make China uphold its WTO commitments has become even harder, as if that were possible.

Huawei is back where it was five years ago when it joined with 3Com to found an enterprise networks JV on the mainland. It sold its share of that business, H3C, to its partner three years ago. It was the only profitable part of 3Com and was one of the prime reasons for its tilt at 3Com.

Huawei has made a $16 billion business out of selling gear to carriers and wants to carve out a similar role in the enterprise market. It is still searching for one.

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