Huawei's headquarters in Shenzhen, a designated special economic zone that was the laboratory for China's experiments in economic liberalization.
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Huawei did not achieve its global reach without help from Beijing, analysts say. The company "has huge pockets because of the way it has integrated with the Chinese government," says David Emberley, who analyzes telecom equipment at the research firm IDC. According to Hu's 2011 open letter, the state-owned China Development Bank made credit lines worth $30 billion available for potential customers of Huawei equipment. Huawei strenuously denies that its ties to the government are cause for alarm. "We have the same relationship [with the Chinese government] as Cisco does with the U.S. government," says spokesman Scott Sykes.
Barriers to Entry
That cuts no ice with U.S. Lawmakers, who have repeatedly intervened to stymie Huawei: this is a rare economic issue that enjoys almost total bipartisan support in Congress. "Given the number of cyberattacks which have occurred in the past year alone, the U.S. government must take every precaution in protecting their networks," says Senator Saxby Chambliss, the top Republican on the Senate Intelligence Committee. In 2011, Huawei was pressured by U.S. officials to unwind a $2 million acquisition of assets from insolvent server-technology firm 3Leaf Systems after it had already completed the deal. As far back as 2007--08, Huawei backed out of an attempt to acquire U.S. network-equipment outfit 3Com with Bain Capital after the proposal faced resistance from Washington. Ruppersberger says he met with Huawei's founder last May and confronted him. "I basically said, 'Look, I know we're in a global economy, but the bottom line is you need to tell your country to stop cyberattacking our businesses because, if not, it's our obligation to protect United States citizens from these thefts.'" Ruppersberger says Ren denied any link between his company and the Chinese government.
Huawei executives argue that spying on customers would be corporate suicide. "It would be immensely foolish for Huawei to risk involvement in national security or economic espionage," Charles Ding, a senior vice president at the company, told the House committee during hearings last year. Other Huawei officials suggest that security jitters are a cover for old-fashioned protectionism. "Security is not the real issue," says Rajiv Weimin Yao, a Huawei vice president based in Gurgaon, near New Delhi. Huawei says its competitors benefit from steps to block its progress. "You can't help looking at the U.S. [security concerns] with jaded eyes," says Eric Harwit, a professor of Asian studies at the University of Hawaii and the author of China's Telecommunications Revolution. U.S. politicians, he says, "are just protecting their own companies." Huawei points out that it manufactures equipment in the same way most major technology firms do, with parts collected from all over the world, including the U.S. For some of its production, Huawei outsources the assembly to other companies like Taiwan's Foxconn, which also makes Apple's iPhones.
But it isn't just the U.S. that is worried about Huawei's intentions. Last year the Australian government prohibited the company from bidding to supply equipment for a national broadband network. In the U.K., a parliamentary committee is investigating the security implications of British Telecom's use of Huawei equipment. Canada, too, has expressed concerns about the company's gear.