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Huawei Defends Reputation in U.S. After Failed 3Leaf Deal

Fri, 02/25/2011 - 6:49am
Maisie Ramsay

In an unusual display of openness, China-based infrastructure company Huawei has penned an open letter defending the company's reputation in the wake of its failed attempt to purchase server company 3Leaf Systems.

Huawei has faced intense government scrutiny over its U.S. business operations due to concerns that its supposed ties to the Chinese government and military could compromise national security.

The letter, prompted after the Committee on Foreign Investment in the United States (CFIUS) asked Huawei to halt its acquisition of 3Leaf over security concerns, attempts to rebut several long-standing rumors over financial backing from the Chinese government, ties to China's military, intellectual property rights violations and threats to national security.

Huawei USA Chairman Ken Hu, who authored the letter, wrote that the rumors have had a "significant and negative impact" on the company's ability to do business in the U.S. and suggested the rumors were fueled by Huawei's competitors to keep its competitively-priced products out of the market.

"Unfortunately, over the past 10 years, as we have been investing in the United States, we have encountered a number of misperceptions that some hold about Huawei," Hu wrote in the letter. "Unfounded accusations have jeopardized our business activities, with many false claims driven by competitive interests, which we understand because competition can be difficult."

Hu called on the U.S. government to conduct formal investigations into any threats Huawei and its products could pose to national security and said Huawei would cooperate fully with the government's inquiries.

"We have faith in the fairness and justness of the United States and we believe the results of any thorough government investigation will prove that Huawei is a normal commercial institution and nothing more," Hu wrote.

Government concerns over national security cost Huawei and ZTE, another Chinese infrastructure company, a chance to bid on Sprint Nextel's network modernization project last November. The $5 billion project was awarded to Samsung, Ericsson and Alcatel-Lucent.

Questions over Huawei's reputation also blocked the company's attempt to buy out 3Com and put a kibosh on its plans to bid on Motorola's networks business this past summer, which was acquired by Nokia Siemens Networks. Huawei is suing Motorola to keep it from releasing its trade secrets to Nokia Siemens and won a preliminary injunction in the case this week.

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