If Lenovo can make it in US, so can Huawei - or so the thinking goes

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

Huawei Technologies is hoping to follow in Lenovo's footsteps.

The Chinese telecommunications equipment maker asked US authorities yesterday to investigate the company in an attempt to allay fears that it was a threat to American national security.

Computer giant Lenovo Group faced similar concerns five years ago. But, after US politicians labelled it a security risk, it managed to prove that perception wrong and steadily expanded its business in the country.

'We had issues before when we wanted to sell products to the government,' Lenovo chief executive Yang Yuanqing said. 'We now have a significant public sector and federal government business in the US.'

Lenovo, the world's fourth-largest supplier of personal computers, reported last week that sales from its so-called mature markets in western Europe and North America grew 22 per cent year on year to US$2 billion in its fiscal third quarter to December.

'Last quarter, we grew more than 30 per cent in North America [alone] while the market [for personal computers in the region] was shrinking,' Yang said.

In 2006, roughly a year after completing its US$1.75 billion acquisition of International Business Machines' personal computer business, Lenovo saw a deal get red-flagged by US politicians because of national security concerns.

In March that year, it bid successfully for a US State Department contract to provide 16,000 ThinkCentre M51 desktop computers and equipment worth more than US$13 million through its American distributor CDW Corp. The computers would be used in a classified network linking US embassies and consulates around the world.

Under pressure from some members of the US Congress who claimed the Hong Kong-listed Lenovo was held by the Chinese government and that the purchase of its computers might lead to intelligence leaks, the State Department later said it would reallocate 900 of the computers and revise its procurement process.

At that time, Lenovo called on Beijing to lobby Washington 'to increase awareness and improve communications' between fellow member countries of the World Trade Organisation.

'To be fair, the US market is pretty open in the consumer and small- and medium-sized enterprise segments,' said Yang, who noted Lenovo had been growing very well in the US since that unfortunate episode.

Lenovo chairman Liu Chuanzhi said the computer maker 'did not do anything too terribly special'.

Liu said Lenovo was successful in showing it was an international company, with plenty of Americans working in senior positions, US private equity firms TPG and General Atlantic as stakeholders, and two headquarters, in North Carolina's Morrisville and Beijing.