History of telecom company illustrates lack of strategic trust between U.S., China
By John Pomfret
Washington Post Staff Writer
Friday, October 8, 2010; 12:33 AM
SHENZHEN, CHINA - Late last year, as AT&T was preparing to buy hundreds of millions of dollars of equipment for its next-generation phone system, one of its senior executives received a call from the National Security Agency.
The subject was AT&T's desire to give a burgeoning Chinese telecommunications firm a contract to supply some of the equipment. The message from the NSA - the nation's electronic spying agency - was simple: If AT&T wanted to continue its lucrative business with the U.S. government, it had better select a supplier other than Huawei, said several people with knowledge of the call. In February, AT&T announced that it would buy the equipment it needed from Swedish-owned Ericsson and Paris-based Alcatel-Lucent.
The NSA called AT&T because of fears that China's intelligence agencies could insert digital trapdoors into Huawei's technology that would serve as secret listening posts in the U.S. communications network, said the sources, who spoke on the condition of anonymity to maintain their relationship with the companies. Huawei, the NSA and AT&T declined to discuss the agency's intervention in the deal.
Huawei's experience illuminates the hole at the center of the United States' relations with China: the absence of strategic trust. Although President Obama has said the United States welcomes China's rise, significant parts of the U.S. government view China as a threat to national security.
The trust gap is a major obstacle for China and its companies as they seek to enter more sensitive parts of the global economy. But if the aborted AT&T deal was a setback for Huawei, the history of the company and its founder demonstrates a determination to prevail.
Huawei sells equipment, software and services to 35 of the world's 40 biggest telecom companies. It supplies one-third of the telecommunications equipment used in China. It is the leading vendor of such equipment in the developing world and number two in Europe. The sun never sets on Huawei's empire, which stretches from South Africa to Sweden, Bangalore to Brisbane, Vancouver to Vanuatu.
Still, U.S. senators are lobbying against another potential big Huawei sale. Sprint Nextel is considering making Huawei's equipment the backbone of its next-generation mobile and wireless technology. If the deal goes through, U.S. officials said, they are concerned that other major carriers will choose Huawei as well.
Sen. Jon Kyl (R-Ariz.) and seven other senators are accusing the company of links to the People's Liberation Army and Iran's Revolutionary Guards Corps. In an Aug. 18 letter, they wrote: "Huawei's position as a supplier of Sprint Nextel could create substantial risk for U.S. companies and possibly undermine U.S. national security."
Why pick on Huawei?
In the past six months, Huawei has hired lobbyists, consultants and a public relations firm in Washington. Its executives have announced a program to have independent companies check Huawei's software and equipment for potential national security problems. On Capitol Hill, Huawei's backers have charged that much of the criticism of Huawei is protectionism. Most telecommunications equipment, they say, is manufactured in China, so why pick on Huawei?
To counter suspicions that the PLA controls part of the company, Huawei last year released shareholding information for the first time, reporting that its 60,000 employees held 98.58 percent of the shares. Founder and chief executive Ren Zhengfei holds the remaining 1.42 percent. A conservative valuation of his shares would put their value at about $1 billion.
"In the past, one of our shortcomings was that we weren't transparent enough," Guo Ping, the company's chief of strategy, said in an interview at the company's chrome-and-glass campus in Shenzhen. "We understand that in America we need to increase our transparency, to show people who is Huawei, what is Huawei."
Ren is the man driving Huawei's growth. A 64-year-old former PLA technician, Ren founded Huawei in the 1980s and began selling telephone equipment. In the cities, the big Chinese state-owned companies wouldn't touch Ren's wares. But in rural areas, Huawei's cheap, easy-to-use products were popular. Ren hewed to a military strategy of Mao Zedong: Surround the cities with the countryside.
"Rats were chewing through the wires, and the electricity didn't always work," said Ken Hu, a senior executive who was one of a team of engineers who traveled to every one of China's 2,800 counties to market Huawei's products. "We had to devise systems that would deal with that. It was a challenge."
Although Huawei is technically a private firm, it has long benefited from an intimate relationship with the Chinese state. Small-time telephone companies that wanted to buy Huawei's equipment didn't always have the money to pay. So the state-run China Construction Bank loaned the companies the money, said a Shenzhen-based consultant who negotiated the deal. It is unclear whether the local companies repaid the loans, said the consultant, who insisted on anonymity out of fear that he would lose business. "China Construction took the hit, but Huawei boomed."
'Keep cool'
Huawei's growth paralleled the herky-jerky rise of many Chinese firms. To achieve smoother expansion, Ren set aside his Mao and looked to America. In a visit to the United States in 1997, Ren spent weeks interviewing the corporate titans on the secrets of their success. Guo, the Huawei strategist, said Ren traveled by bus, lugging a briefcase full of cash because Chinese then had no credit cards.
Ren declined to be interviewed for this article.
Ren established a close relationship with IBM, which for more than a decade has helped him reshape Huawei's corporate culture and streamline its innovation processes. Huawei has grown into one of the most profitable telecommunications company in the world; last year Huawei's revenue hit $22 billion, with profits at $2.7 billion.
In 2000, Huawei broke into the overseas market by expanding into developing countries. The state-owned China Development Bank has provided Huawei with a $40 billion line of credit to help finance its sales.
Huawei's first Western deal was in the Netherlands in 2001. Its breakthrough product was a wireless station that could run several communications technologies, such as GSM or CDMA, more efficiently than its competitors' units. Upgrades could be achieved not by replacing the hardware but by switching the software - a huge savings for its customers.
Competitors have long questioned how Huawei obtained its technology. Cisco sued Huawei in 2003, accusing it of stealing software. Cisco said it had discovered computer code in Huawei's products that contained secret personal data inserted by the author of the code - a Cisco software developer. In July, Motorola sued Huawei, accusing it of helping to establish a dummy corporation that allowed corrupt Motorola engineers to funnel trade secrets to Huawei. Huawei has denied all of the charges in both cases but settled its case with Cisco by agreeing to stop selling the specific product named in the suit.
Ren has also been dogged by accusations that Huawei would ultimately serve the interests of the Chinese Communist Party, not its customers or the market. Ren's aides reject such charges, but the founder's writings suggest a more complex picture. Although Ren professes affection for the United States, he has also called for the dissolution of NATO and says he thinks the United States is engaged in "tricks aimed at undermining China's international environment in order to contain it."
Although he has told American interlocutors that Huawei wants to function purely as a multinational, he has written that "Huawei's international marketing policy follows our country's foreign policy line" - implying a level of coordination with government that most multinationals would never acknowledge.
In an essay in which he urges his staff not to cooperate with the media, he writes: "Our workers need to unswervingly keep cool, listen to [the party], follow [the party], and don't utter anything that they shouldn't."
Big players
Huawei began its operations in the United States in 2001. Charlie Chen, chief of the North America section, recalls that he "could barely tell the difference between a hamburger and a sandwich, not to mention a bagel." It took Chen six months to hire his first American employee.
Almost a decade later, there's a buzz of excitement around the firm's headquarters in Plano, Tex.
Jerry Prestinario, vice president in charge of delivery and service, joined Huawei in 2007 after 35 years at Lucent. "I spent the last five years of my career downsizing," he said. "Now I'm doing several interviews a week. It feels great to be part of a company that it is growing."
Within Huawei there is a debate about how to convince American executives and the U.S. government that its equipment can be trusted. Earlier this year, Huawei hired Matt Bross, who as chief technology officer of British Telecom supported the purchase of Huawei equipment. Bross, a onetime Missouri farm boy who pushed the Huawei deal over the opposition of British intelligence, has thrown himself into devising a system to calm nerves in Washington and beyond.
"It's basically lifting your skirt and letting them peek," Bross said. "It should be something our whole industry adopts, not just us."
In the spring, Huawei sought advice from a Washington firm led by former Defense secretary William Cohen. The Cohen Group laid out an aggressive program under which Huawei would build a wall around its U.S. operations, set up a purely American board and create a completely American company that would no longer be controlled by its parent in China.
In researching Huawei, executives at the Cohen Group discovered that the U.S. government had little idea of the extent of Huawei's business in the United States. American telecommunications firms are not obligated to inform the government of their purchases of foreign-manufactured equipment.
Although Huawei has just 2 percent of the U.S. telecommunications market, it is working with many big players. It is involved with Comcast on a project to provide voice calls through cable lines and is in talks with Verizon. Huawei has supplied the equipment for wireless service in Seattle and Chicago and will soon do so in San Francisco. Last year it sold $400 million worth of equipment in the United States. This year it expects to double its sales. In the United States, Huawei operates three R&D centers and eight other service centers and employs more than 1,000 people.
Competitive edge
In July, another adviser emerged with a less onerous plan. William Owens, a former vice chairman of the Joint Chiefs of Staff, offered to set up an American company to help Huawei sell its wares in the United States without requiring any changes to Huawei's American management. The company would check Huawei's equipment for bugs and install and service the equipment.
Owens and Ren also had a history; when Owens was the chief executive of Nortel in 2004, Ren was interested in buying the firm.
"We are close to [Huawei]," Owens said. "We've talked to them about what we think is necessary to establish the confidence to get into the American market."
The Cohen Group walked away from the deal, convinced that the U.S. government would not be satisfied that Owens's firm could ensure the security of Huawei's equipment.
Underestimate Ren at your peril, Ren's competitors say. Indeed, in his writings, Ren exhibits the fiercely competitive edge that has propelled Huawei into the world's top ranks. He waxes philosophical about his firm's prospects in the United States.
"China-U.S. relations will continually have twists and turns," he writes, "but that shouldn't stop us from learning from the American spirit of innovation so that we can become richer and more powerful ever faster."
中國軍方背景公司 試圖滲透美、印無線市場
作者 Lucy Wu
台灣英文新聞 記者
http://www.taiwannews.com.tw/etn/news_content.php?id=1314846
Published: 2010-07-11 12:00 AM
英國金融時報引述消息人士的話說，中國深圳華為技術有限公司參加美國無線寬帶網絡擴容項目招標，試圖讓華為生產的無線通訊設備打入美國市場。但華為具有中國軍方背景，無線通訊又是敏感技術，美國政府肯定會嚴格審查。
華為已經參加了美國斯普林特(Sprint Nextel)公司無線寬帶網絡的擴容招標，希望向斯普林特公司銷售自己生產的無線通訊設備。
斯普林特是美國第三大無線通訊運營商。評論認為，一旦競標成功，將是華為首次進軍美國主要通訊市場。
華為公司創始人任正非從前是解放軍工程師，其公司也具有軍方背景。路透社說，美國政府擔心，一旦華為的通訊設備進入美國，中國軍方可能會利用美國無線通訊網絡從事經濟間諜活動。華為2008年出資22億美元，聯合收購美國3Com公司的計劃因此受挫，被迫放棄。評論推測，華為本次參加斯普林特的擴容項目招標，也面臨美國政府的安全審核。
斯普林特公司拒絕證實這個消息。公司發言人斯洛特(Scott Sloat)沒有直接否認，只強調消息應由中方證實。
他說，我們就是無法對消息置評，因為沒有任何進一步的消息可以提供。消息涉及這家中國公司和中國政府，所以你需要讓他們發表評論，我們沒有任何評論。華為公司美國市場發言人詹尼·阮(Jannie Nguyen)也拒絕發表評論。
深圳華為總部一名發言人對路透社說，作為他們在美國目前商務活動的一部分，他們只是參加合同招標。
華為收購3Com公司受挫後，聘請小布希政府時期國家安全委員會與國務院的法律顧問貝林杰(John Bellinger)擔任其美國市場政策顧問。華為以後多次參加美國市場的項目招標，並贏得合同，華為已經向考克斯通訊(Cox Communications)公司旗下手機業務的網絡基礎建設提供通訊設備，此外還參加Clearwire公司無線網絡設備合同的招標，並有意收購摩托羅拉美國無線通訊的部分市場份額。2010/07/10
印度政府：無線運營商不得採購華為產品
除了美國政府以外，其他國家也對華為抱有戒心。正是由於華為的軍方背景，不久前，印度內政部以安全為理由，對華為、中興等中國公司生產的無線通訊設備進行安全審核，並派發“黑名單”，規定審核完成前，任何印度無線運營商不得採購名單上中國公司的產品。
此事引發中國政府的高度關切。新華社引述中國商務部長陳德銘的話說，中方關注這份名單，並正進行調查。陳德銘希望印度公正對待中國企業，為中國企業到印度投資創造公開、公平、透明的環境。
印度政府電訊委員會負責技術事務的委員普拉卡什否認有黑名單，但承認安全審核重點針對中國製造商。
他說，他我們安全機構正在同服務供應商接洽，協議正接近尾聲，估計再過幾個星期，就會明確宣布獲得批准的對象和條件。不存在所謂的黑名單，但在程序完成之前，我們不允許中國公司經營。”
印度政府曾經懷疑，中國通過通訊手段獲取印度政府的敏感資訊。普拉卡什說，為了加強防範，印度內政部這次要求無線運營商預先交付軟件和硬件樣品，由政府保管，一旦出事，可以增加對應手段。
他說，這些供應商必須同意，設立軟件和硬件設計的代管帳戶，帳戶將被安全保管，一旦發生事故，第三方會打開帳戶，帳戶內所有軟件拷貝必須齊全。
印度通訊部長托馬斯(PJ Thomas)7月9號證實，新德里政府已經同有關機構與工業組織接洽，聽取他們的意見。2010/07/10
憂遭中竊聽 美國安局制止AT&T進中國貨
〔自由電子報訊〕美國《華盛頓郵報》報導，美國通訊公司AT&T為了生產新一代的電話系統，去年底原本打算向中國「華為」公司購買上億元美金的材料，疑因美國國安局的一通電話，這筆生意無疾而終。
報導指出，AT&T原本打算向中國近日迅速崛起的「華為」通訊公司購買部份材料，但疑因美國國安局打了一通電話，根據相關人員說法，內容為：「若AT&T想持續和政府做生意，最好換一家供貨廠商。」而AT&T今年2月就宣布，他們將改為向瑞典的易利信公司和巴黎的Alcatel-Lucent公司購買。
據了解，國安局會致電AT&T要求更換供貨廠商，是因為擔心中國的情報單位會在產品內裝設數位竊聽器，竊取美國的通訊網。但牽涉至此事件的華為公司、美國國安局以及AT&T，都拒絕為此事做出回應。
報導還認為，華為這次的事件讓中美關係更加惡化，因為他們缺乏信任，即使歐巴馬表示樂見中國崛起，但其實已經默默把中國視為國家安全的一大威脅。
中國的公司最近一直積極於打入全球經濟市場，但卻因為信任的鴻溝，在過程中造成很大的障礙。
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