US cable throws more mud at Huawei

Huawei responds with open letter.

A US diplomatic cable leaked by WikiLeaks has further hampered the efforts of network equipment vendor Huawei as it aims to win more global business.

Huawei and fellow Chinese-held networking vendor ZTE have already been banned from contracts in India over national security fears.

In a cable released on WikiLeaks, Huawei and rival Chinese telco supplier ZTE are credited with providing "good and cheap" equipment that often wins government procurement tenders.

But the cable also quoted Michael Joseph, CEO of Safaricom, Kenya's largest mobile phone company, who criticised the Chinese companies for providing poor after-sales support.

According to the U.S. diplomats that authored the cable "... [Joseph] used a monosyllabic expletive beginning with 'S' to describe after-sales service."

"When there are [sic] equipment problems later, [Joseph] said, the Chinese run for the door."

The cable reported that Safaricom purchased equipment from Huawei in 2006, and that Joseph now viewed that deal as "too good to be true."

The cable said Huawei "effectively reneged and only delivered half the equipment promised in the contract."

Joseph is said to have gone to China in person and eventually met Huawei's CEO to force a cancellation of the contract.

More insidiously, the U.S. authors accused Chinese firms of buying politicians and influence in Kenya.

- Read iTnews' David Havyatt's assessment of the Huawei threat

Winning the PR battle

Huawei has been on the offensive in the United States over what it claims are "misperceptions" held about the company, in an open letter to the Wall Street Journal.

The letter, written by the deputy chairman Ken Hu of Huawei Technologies Co, was published after the Chinese telco gear giant was ordered by U.S. regulators to divest US start-up 3Leaf which the Chinese company had purchased in May 2010 for US$2 million.

Concerned that the purchase of 3Leaf may be a risk to national security, the Pentagon had asked that the Committee on Foreign Investment in the United States (CFIUS) vet the deal.

CFIUS said in February that Huawei either has to divest 3Leaf, or the committee would recommend to president Obama that the purchase be undone.

In the letter, Hu said that Huawei respects, advocates and lives by the values of democracy, freedom, rule of law and human rights in the U.S.

Hu also said that claims of Huawei's close ties with the Chinese military were unfounded and unproven, ditto disputes over intellectual property rights and allegations of financial support from the Communist government.

Calling these allegations "falsehoods" Hu said they had a significant and negative impact on Huawei's business activity. Hu sought to dispel the allegations that while Huawei founder Ren Zhengfei joined the Chinese People's Liberation Army (PLA) Engineering Corps in 1974, the CEO of the telco giant held no military rank.

Ren retired from the PLA in 1983, Hu wrote, after the Chinese government disbanded the Engineering Corps. Before leaving the military, Ren was invited to the National Science Conference in 1978 and the National Congress of the Communist Party in China in 1982, "because of his outstanding performance".

Hu pointed out that Huawei was paying Western companies hundreds of millions of dollars in intellectual property rights fees every year. He admitted that Huawei received financial assistance from the Chinese government in the form of tax incentives. These were, he said, similar to those offered to U.S companies by the American government.

Huawei was not a threat to national security in the U.S., Hu wrote. There was no evidence that Huawei had violated any security rules and the company hired third-party companies to audit its products to certify safety and reliability at the source code level, he said.