Australia is shutting China's Huawei Technologies Co. Ltd. out of the largest infrastructure program in the country's history. Citing national security concerns, the Australian government says it won't allow Huawei to bid for any part of a $38 billion telecommunication project "intended to connect 93 percent of homes and workplaces with fiber-optic cable, providing broadband service in urban and rural areas," the New York Times reported.
Ouch! Huawei said it wanted to submit a bid for about $1 billion (for part of the project) but was promptly informed it would not be allowed to participate.
Australian Prime Minister Julia Gillard confirmed the decision. "You would expect as a government that we make all of the prudent decisions to make sure that the infrastructure project does what we want it to do, and we've taken one of those decisions," she said.
Apparently, Huawei's close connection with China's military got the Aussies thinking they wouldn't like to have the Red Army infiltrate their brand new network via a Trojan implantation by an entity many consider a surrogate for (or at least heavily indebted to) the Chinese government. Huawei insists it's an independent enterprise operating above board, but some countries don't seem to believe it.
A former Australian foreign minister quoted in the NYT criticized his country's decision. A few other countries -- not including the United States, the UK, Germany, or any of the major Western powers -- have allowed Huawei to bid on contracts for similar projects.
What else can Huawei do to win Western governments' trust?
Australian Prime Minister is taking some of landmark decision for her country. They are bold and beautiful. She is quite candid in her communication. I like all counrty should take lessons to protect itself from other foreign power.
Whilst I find it somewhat surprising they did this I can also understand the sentiment behind it. China does not have the greatest track record when it comes to electronic interchange transparency.
Flyingscot, The Australian government is footing the bill so it may also believe local companies and Western counterparts should benefit more. However, what happens if a local company was investing this capital in its network? Will the government have the right to by fiat insist Huawei cannot participate due to "national security concerns?" I believe Australia definitely is right to be concerned and China itself probably wouldn't allow a foreign company to be involved in such a major IT project, but Australia is a democracy, China is not.
"China itself probably wouldn't allow a foreign company to be involved in such a major IT project, but Australia is a democracy, China is not."
Hmm... if China can pretend security concerns to prevent other countries from involving into its "major IT projects", I think that it is fair to accept such stand from those countries as well. As you said, Australia may want its local companies to benefit more, but their argument about "national security concerns" seems to be valid.
Each government has the right to make the decision that they believe is in the best interest of national security. I'm sure China has made similar decsions regarding contract awards.
The Aussies are justified in their decision. They did the right thing. I wish our gvt would do more of that to protect our technologies and our country.
rohscompliant, I can just imagine the case before the US Supreme Court if Verizon signs on Huawei to build a $38 billion fiber optic network and the executive branch says "heck no" because of national security concerns! The difference here is that the Australian government is spending its own money and "national security concerns" aside, it can decide who gets a slice of the business. It doesn't even have to say why.
I think the Australian government purposely announced why it denied Huawei a piece of the business because it wanted to send a message to the Chinese government: Stop trying to snoop. We know you want to access our network!
I share your opinion. Prevension is better than cure. Huawei already works with all of Australia's major operators. If the australian government is preventing the company from applying for the new broadband project, they certainly have a valid reason for that.
I believe the US government faced the same dilemma and also said no to Huawei. I believe Huawei appealed the ruling or asked for an investigation. Althuogh the US and Aussie governments are within their rights to make their own decisions, if you operate in an open-market society, you have to play by the rules of an open market. If China were to shut out foreign companies--and they have--it is not as surprising because of historic trade practices. It is a dilemma that Western compnaies and government have brought on themselves. But I agree that Australia is within its right to do what it did.
Bolaji, I think Huawei has faced similar problems with some of other Asian countries also. Sometimes back I had read an allegation from an agency that, most of the communication and networking equipments from Huawei are embedded with malwares, which can periodically send statics and datas to a preconfigured receiving centre. Its more or less like a spy work.
I do really wonder how Huwaei can erase all this black mark and be able to get into US, Europe and Australian market. I feel sorry for Huawei for their inability to get a chance to bid for such a prestigious project.
It looks like Huawei is willing to make concessions to the Aussie government. Huawei is willing to allow the Aussies to see its code and a variety of other things I don't understand all that well. But a willingness to open the kimono is a step in the right direction.
Well that sounds great. Huawei may have decided to allow Aussies to view its code of practice and other things, can it manage to twist the Aussies hands? I doubt this step will make much difference now..
This is most certainly a Good Move on Huawei's part.
Hopefully the Australian Govt will take up on their offer and let them bid in the auction(after they have satisfied themselves about their Security concerns).
After all,just because they bid does'nt mean that they will win the Auction-They can always be disqualified for some other Techical reason later on.
This move will help build up mutual Trust between Huawei(and by extension other major Chinese Manufacturers) and the West.
Hopefully it will stop the current protectionist wave we are facing today in Global Markets.
Huawei is exiting its Joint Venture with Symantec in Network Security and moving outside the US.
This was the most important part of the exit
"
People with knowledge of the venture, who would speak only on condition of anonymity because they were not authorized to speak, said Huawei had already laid off several workers in Huawei Symantec's Silicon Valley offices this month and planned to move its entire operation out of the United States, largely because of increased American government oversight.
Ashish, Perhaps Huawei is existing simply because they aren't making any money. If you build and they don't come, you pack up and do something else. Huawei tried building but it's not getting the contracts it wants from Western governments.
If it is the case that Huawei threw in the towel on America primarily because they got exasparated by hostility/opposition to them selling their products in America then the Biggest loser is the US Economy(& especially the Taxpayer) as it means one less Market player/competitor and ultimately less choice for consumers and Taxpayers.
Ultimately Competition benefits everybody by reducing slack in the system and encouraging innovation.
Its most most unfortunate that a Major Player had to exit the US market for this reason .
But it is true in the case of Huawei. When you have the door repeatedly slammed in your face it may not make sense to keep knocking on the door. It may be better to call first and resolve the problem with your expected host. Perhaps Huawei just wants to regroup. As you noted, though, the loss is bigger at the customers but the government has other considerations too and we shouldn't wave aside concerns about national security implications.
As I have previously stated;the only information I have on this case is what the media provides me with-I do not have any special Access to either US Govt Research or Files(which may/maynot clearly show the Security threat from Huawei's products);I also have No Special Access to Huawei's Security Code as well their software which can tell me descively whether or not there is Malware/Spyware embedded in their products.Neither do I have any insight into how their Senior Management thinks and exactly why they made this decision.
The Statement given in the Media(NYT) clearly states that Huawei was forced to exit their US JV because of "Threat of Increased US Govt Oversight".
You could potentially spin that in any number of ways
One)They actually don't want to expose their Code/Technology to increased Govt scrutiny because it actually has Spyware embedded in it.
Two)This is a way for Huawei's US Management to save face in front of the parent company in China in light of their failure to Generate Sufficent Deals despite the obvious Investments pumped into the US.
Three)They just want to re-group and re-think their US Strategy before re-entering the US Market with US specific products.
or Four)The US Govt put real pressure on them to exit the American Market immediately(for Non-National Security reasons-Protectionism).The Chinese are known to be extremely polite about these issues.
As I said before I don't have any special insight into either the US Govt or Huawei so I have to go with what the Media says here.
If it is either Reasons One,Two or Three;I am fine with it.But if it is Reason Four then I think its most unfortunate.
Australia is not the first and neither will it be the last to bar Huawei from competing for Telecom Contracts Globally.
Part of the reason is Legitimate Security concerns,Part of the reason is under pressure from Domestic Concerns(protectionism) and part of it is unneccesary fear of the Rising Power of the Chinese Economy.
Its important that countries sit down and analyse this event in its totality.
Because as this article below from the Financial Times clearly states,China is too important for some of the Biggest(& Fastest) Growing countries in the world today including Australia,Brazil,Korea,Taiwan,India,Indonesia,Singapore,Russia, The US ,Japan and Germany.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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