Huawei in Mind as Candidates Spar Over China

The U.S. presidential candidates avoided naming technology companies specifically, but the specter of Chinese industrial espionage, patent infringement and security threats at the hands of firms like Huawei Technologies Co. was top of mind during a vigorous foreign policy debate Monday night.

“China is stealing our patents, hacking into our computers, counterfeiting our products,” Republican challenger and former Mass. Gov. Mitt Romney said during the debate.  “We want a great relationship with them. But we can’t let them roll all over us, stealing our property … stealing our jobs.”

“China has not played by the same rules,” Romney said.

President Barack Obama took a slight more conciliatory tone, saying that he preferred China as a trusted partner, but that he wanted “to send a clear signal” that the Asian nation must abide by “basic international standards.”

The third and final presidential debate took place at Lynn University in Boca Raton, Fla., and focused on foreign policy issues ranging from Middle East security to Latin American trade to the U.S. relationship with Russia.

The rhetoric on China was relatively low key, considering the firestorm in recent weeks kindled in part by U.S. legislators and Washington insiders who have labelled Huawei and fellow Chinese telco vendor ZTE Corp. as industrial spies at best and outright threats to national security at worst.

Rep. Mike Rogers (R-Mich.), chairman of the powerful House intelligence committee, appeared on CBS’s 60 Minutes two weeks ago to warn the U.S. market of the Huawei threat.

“If I were an American company today… and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers’ privacy, and you care about the national security of the United States of America,” he said.

The House admonition was followed with reports that the Obama administration had led its own security review of Huawei equipment and business practices and found no evidence of espionage or deliberate cybersecurity threats or practices that would undermine the national security of the United States, Reuters news service reported. The White House has since denied it authorized any such report and disavowed the conclusion that Huawei, the world’s second largest provider of telecommunications infrastructure equipment behind Ericsson AB of Sweden, had been exonerated.

In Monday’s debate, the closest either candidate got to mentioning Huawei specifically was in an anonymized anecdote Romney shared of witnessing the discovery of counterfeit Chinese goods packaged and labelled as U.S. made. Romney said he felt such activities were endemic in the Chinese business world and that he would label China a “currency manipulator on day one” of his presidency in order to get them to play fair.

With or without such action, it may be too late to rehabilitate the reputation of companies like Huawei after the onslaught of government criticism and bad press in recent weeks. Even U.S. solution providers have since adopted their own brand of negative sentiments toward Huawei and similar foreign firms. In a poll conducted by Channelnomics and The 2112 Group, U.S. solution providers overwhelmingly said the U.S. governments assertions against Huawei would dampen sales and marketability of the company’s products, and they would be less likely to work with companies labeled as a security threat.

European countries, meanwhile, continue to embrace Huawei, with officials in the U.K. last week announcing the vendor’s $2 billion investment in a new regional headquarters and the plans to expand in the British Isles. And indeed there are dozens of foreign technology companies who supply the underpinnings of critical infrastructure with whom U.S. companies and the U.S. government have no problem at all.

Some in the industry have called for companies like Huawei and their U.S.-based rivals to share more information in the case of security. CTIA, the group formerly known as the Cellular Telephone Industry Association, last week said its group of vendor and carrier members — which includes both Huawei and ZTE — are in the best position to secure wireless communications. CTIA urged all members to share more information with each other and the government in pursuit of safer networks.

It’s a call Huawei representatives say they welcome. “Huawei appreciates any industry or other group that promotes the need for rational and universal solutions to meet what are industry-wide challenges,” William Plummer, vice president for external affairs at Huawei in Washington, told Channelnomics. “Ultimately, global and transnational cyberthreats will be best and effectively addressed via industry-informed public-private initiatives to develop standards and disciplines that will raise the security assurance bar across the ICT industry and across the world.”

Plummer called the House report on Huawei a “political distraction from the very initiatives mentioned [by CTIA]. The committee seems focused on the acts of other states. To the extent that there are issues between states, they should be managed through appropriate diplomatic or other channels, not by holding hostage an independent, world-respected and trusted company.”

Huawei, ZTE and the Chinese government are not taking the U.S. criticism lightly. The Chinese commerce ministry characterizes the House report as subjective and based on incomplete investigations. ZTE said the U.S. government should make similar assertions about products from U.S. companies, as most are made by outsourced manufacturers in China. And Huawei has called the claims baseless and counter to their business interests, and said the negative reports were the product of competitive interference from the likes of Cisco Systems Inc. and others.

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