China's Huawei Technologies Co. Ltd. has thrown down the gauntlet and bluntly told the US government to conduct an investigation of its operations in the country to put an end to allegations about its alleged activities as a tool in the hands of the Chinese military or as a spy organization.
Frustrated by repeated accusations of being considered a front for China's government, the communications equipment company has taken the unusual step of asking the US to conduct a thorough investigation of its operations to ensure it can continue to operate legally and without restrictions in the country.
Ken Hu, deputy chairman of Huawei, in an open letter charged the US government and rivals with placing obstacles to its operations and said allegations it is being controlled by China's government are not only false and without basis but also hurt its ability to make investments in the country. Hu's letter followed regulatory action earlier this month denying the company the chance to purchase assets of 3Leaf Systems, a failed US firm.
"We sincerely hope that the Unites States government will carry out a formal investigation on any concerns it may have about Huawei," Hu said in his letter...
Unfounded allegations have jeopardized our business activities, with many false claims driven by competitive interests, which we understand because competition can be difficult. Huawei's world-leading wireless broadband technologies can bring American telecom operators, as well as the general public, more advanced technologies and higher network speeds at a lower price.
Hu went even further by stating that Huawei had been repeatedly accused by unidentified rivals of being involved in activities that were not compatible with its role as a private enterprise. Those allegations, which the company hinted were shared by public officials, have constrained the company's expansion plans, since it has so far been unable to make major investments in the US despite employing thousands in the country and investing, so far, more than $6 billion in local R&D operations. It requested clarification from the US government on what it is legally able to do in the country.
While we can commit to not selling any products that concern American operators, we sincerely request guidance from the United States government on the scope of such restricted products and the duration of the related restrictions, as certain technologies that may seem crucial today will lose their leadership and sophistication over time. A full and permanent restriction is way too costly and unfair to any company.
I don't know whether this step will hurt Huawei by ticking off American officials, but one thing is clear: The company has obviously decided to take its case, not just directly to the government, but to the US public. Hu pointedly cited former Abraham Lincoln in his assertion that Huawei's reputation was being marred by repeated misrepresentation of its intentions, allegations the US government seems to have accepted without any substantive evidence:
Former American president Abraham Lincoln once said, "Character is like a tree and reputation like its shadow”. In recent years, misperceptions and rumors have been the shadow of Huawei, affecting Huawei's reputation and, we believe, the United States government's judgment of Huawei. We sincerely hope that the United States government will address this issue by carrying out a formal investigation of any doubts it may have about Huawei in an effort to reach a clear and accurate conclusion.
The US government and US-based rivals cannot hide behind vague and unsubstantiated allegations to deny Chinese companies the rights reserved for other private enterprises. If Huawei is really a threat to US security then the government must prove its case either publicly or lay it out to the company in private. Simply denying it and other Chinese companies the rights to invest in US companies on the basis of unproven allegations is illegal -- and damaging to the US. Now that Huawei has gone public, the US must respond.
Here are a few additional points from the letter:
- Huawei's objective in the US: Huawei is committed to being a long-term investor in the United States where we already have over 1,000 U.S. employees. In 2010, we purchased products and services from American companies totaling some US$6.1 billion. Our investment in research and development activities in the United States has grown by an average of 66% per annum and it reached US$62 million in 2010. We have long been offering innovative products and services to our customers in the United States and we have always been a responsible investor, employer, taxpayer and corporate citizen.
- Alleged misperceptions about Huawei: 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. These include unfounded and unproven claims of "close connections with the Chinese military," "disputes over intellectual property rights," "allegations of financial support from the Chinese government," and "threats to the national security of the United States". These falsehoods have had a significant and negative impact on our business activity and, as such, they must be addressed as part of our effort to correct the record.
- Impact of allegations on Huawei: Unfounded accusations have jeopardized our business activities, with many false claims driven by competitive interests. In recent years, misperceptions and rumors have been the shadow of Huawei, affecting Huawei's reputation and, we believe, the United States government's judgment of Huawei. We sincerely hope that the United States government will address this issue by carrying out a formal investigation of any doubts it may have about Huawei in an effort to reach a clear and accurate conclusion.
- Request for US government investigation: If the United States government has any real concerns of this nature about Huawei we would like to clearly understand those concerns, and whether they relate to the past or future development of our company .We believe we can work closely with the United States government to address any concerns and we will certainly comply with any additional security requirements. We also remain open to any investigation deemed necessary by American authorities and we will continue to cooperate transparently with all government agencies.
Click here to view the entire letter.