Huawei Technologies, the mainland's biggest telecommunications equipment manufacturer, challenged the United States government to conduct a sweeping investigation of the company in an unusual bid to prove it is not a national security risk.
The unprecedented proposal, which was made public through an open letter released yesterday by Huawei deputy chairman Ken Hu, 'could be a turning point in Chinese investment in the US information-technology sector', according to Gary Li, a specialist at the London-based International Institute of Strategic Studies.
Shenzhen-based Huawei's action followed its recent decision to cancel its US$2 million purchase of part of insolvent IT company 3Leaf Systems after initially refusing a US government commission's request to withdraw from the acquisition on national security grounds.
'We sincerely hope that the United States government will carry out a formal investigation on any concerns it may have about Huawei,' Hu, also the chairman of Huawei's US operations, said. 'We believe the results of any thorough government investigation will prove that Huawei is a normal commercial institution and nothing more.'
Founded in 1987, privately held Huawei is the world's second-biggest telecommunications equipment provider and has more than 1,000 employees in the US. Last year, it bought some US$6.1 billion in products and services from US companies.
Despite Huawei's commitment as a long-term investor in the US, Hu said the company 'has encountered a number of misperceptions' about its origin, source of funds, and intentions in the country.
'These falsehoods have had a significant and negative impact on our business activity,' Hu said. 'The allegation that Huawei somehow poses a threat to the national security of the United States has centred on a mistaken belief that our company can use our technology to steal confidential information in the United States or launch network attacks on entities in the US at a specific time.
'There is no evidence that Huawei has violated any security rules.'
Craig Skinner, from market research firm Ovum, described Hu's offer to allow the US government to inspect and audit the company in terms of its security risk as 'essentially calling its bluff'. 'The US has a number of agencies with the capability to conduct this type of assessment, with the most obvious being the National Security Agency,' Skinner said. 'If this strategy is successful for Huawei then other Chinese vendors would consider the same approach.'
Hong Kong-listed ZTE, the mainland's No 2 telecommunications equipment manufacturer, could be next. It has said the US telecommunications equipment market is 'politicised' and less open than many other countries. 'Compared with the Chinese market, which is open to all vendors, the US is totally different because of so many regulations,' Xu Ming, vice-president for ZTE's wireless product business, said in September.
While some US politicians may have genuine concerns about national security, they also seem to have the added effect of keeping out low-cost and increasingly high-value Chinese competitors in the world's biggest telecommunications market. 'The best way for Chinese companies to grow in the US market is to invest more, but at the same time Americans are absolutely paranoid about Chinese incursions into their economy,' Li said.