Friday, October 12, 2012

UK Intelligence and European Commission Look at Huawei More Closely - IBM as a Partner

British Telcom (BT) has been declining to comment on whether it had received any requests from US officials to stop doing business with Huawei.

Nonetheless, on Friday, a United Kingdom Parliament committee said that it is performing an investigation about  Huawei's business in the UK after governments from Australia and Canada expressed concerns.

The UK Parliament's intelligence and security committee is examining the relationship between Huawei and the UK firm BT.  They are  "reviewing the whole presence of Huawei in regard to our critical national infrastructure and whether that should give rise for concern" according to an article in the Guardian.  Recently, Huawei had announced their intentions of spending almost $2 billion in the UK, including moving into a new 140k square foot building in Reading and plans to increase employment from around eight hundred to about fifteen hundred.  Victor Zhang, chief executive of Huawei Technologies UK, has stated “This move marks the beginning of an exciting new period of development for Huawei in the UK.”  However, this was before the investigation announcement from the intelligence and security committee. 

In March, The Australian Financial Review wrote that Huawei had been banned as a supplier for the $37.4 billion Australia Broadband Network after concerns were raised about the potential security implications.  Huawei, as one would suspect, has been calling this political. 

On the European front, European Trade Commissioner Karel De Gucht has been collecting evidence for a potential anti-dumping or anti-subsidy case against both Huawei and ZTE over subsidies.  The European Commission has suspicions that these two companies have been receiving   receive illegal state subsidies to undercut rivals in Europe. 

Huawei and ZTE are the world’s second and fifth largest manufacturers of wireless telecommunications gear.  Huawei has    many of the biggest telecommunications companies in Europe as it customers.  They include BT and Vodafone in the UK,   Telefónica of Spain, and Everything Everywhere, a partnership between France Télécom and Deutsche Telekom in Britain.  Huawei had European sales of over $3.7 billion last year. They employ about seven thousand people in Europe. 

Huawei spokesperson Roland Sladek   has started, “Europe is almost like a second home market for us.”  Their reception in this is becoming a little chillier.

ZTE is another story.  Cisco terminated a technology relationship with ZTE  in July.  They also  terminated their sales partnership with ZTE  in early October   after an investigation showed  that ZTE had sold Cisco branded networking gear  to Iran.  Iran is under ban from the US government  from  receiving this and other  technologies  from US firms.

IBM as a Key Huawei Partner

An  October 10 Wall Street Journal article,  "Huawei's Ally, IBM", discusses   how IBM has been working closely with Huawei since 1997.  This has included teaching management techniques (R&D, supply chain and financial management),  packaging its technology into Huawei products, a 2000 initiative to jointly develop networking gear, and most recently, advising Huawei on its expansion into selling smartphones and tablets.  Consumer products such as smartphones contributed 21% of Huawei's $32.4 billion in revenues last year. Huawei  announced a strategic partnership with IBM Global Business Services in February. Without IBM, "We could not have had the Huawei of today" stated Charles Ding, Huawei senior vice president for the US. Other companies Huawei has hired as consultants include Accenture, Boston Consulting Group, PrecewaterhouseCoopers, Mercer, and Hay Group.

To read more about Huawei -

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