Quoted: Huawei forced to shift focus away from U.S.

“We are not interested in the U.S. market any more.”

Eric Xu, executive vice-president for Huawei Technologies, at the Chinese company’s annual analysts meeting Tuesday. The Financial Times (subscription required) reports that the company is shifting its focus from selling telecom network equipment in the United States after being identified by the U.S. House of Representatives Intelligence Committee as a possible threat to national security. In October after an 11-month investigation, the committee released a report saying Huawei and another Chinese company, ZTE, were potential spying threats because of their ties to the Chinese government. As we wrote then, the committee warned American companies against using switches, routers and other telecom equipment from the two companies. (Also, see U.S. Panel Report Fallout: China Warning, All Eyes On Huawei.) As the Financial Times lays out, the report made it even more difficult for Huawei to do business in the U.S., where it already had lost out on contracts and been forced to retract a bid to buy 3Com (which was later bought by Hewlett-Packard). Li Sanqi, Huawei’s chief technology officer, reportedly said: “We today face reality. We will focus on the rest of the world, which is reasonably big enough and is growing significantly.” In 2011, the Merc’s John Boudreau wrote about Huawei’s grand ambitions to become China’s first major global company. It had become the world’s second-largest provider of telecom and Internet gear, and Boudreau wrote that it competed with Cisco Systems, Juniper Networks and HP. Meanwhile, Boudreau writes in today’s Mercury News that Bay Area companies big and small are seeking growth in China.

 

Huawei’s headquarters in Shenzen, Guandong province in China. (LiPo Ching/Mercury News archives)

 

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  • sd

    It seems a bit odd to me that Huawei is not doing much of anything to distance itself from statements made in the Intelligence Committee’s report. While selling product in the U.S. is not a necessary component of corporate success, Huawei’s previous interest in doing so indicates that they thought it was worth it. Walking away now sounds to me like they cannot refute the IC’s findings.

    • RK

      This doesn’t necessarily look like guilt to me. Rather, the expense required to mount a defense against agencies of the US government, including those involved in secret information, does not look like a good investment of resources. Only the biggest US federal government contractors would even dream of doing this. And even they don’t come out smelling like roses.

      Why bankrupt your company to prove your innocence, when potential key customers have already been poisoned against you? Instead, go invest those resources into serving other appreciative customers. It will be much much better for your bottom line. (Even if you did prove your innocence, there will be those who won’t believe the verdict, including members of Congress.)

  • sds

    @RK, fair points. It just seems like a lot of business to be walking away from without much more than a whimper.

 
 
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