Huawei Partners Quiet Following 'National Security Threat' Report9:49 AM EST Mon. Oct. 08, 2012
If Huawei's burgeoning U.S. channel is concerned that the $35 billion Chinese telecom giant has been labeled a "national security risk," partners aren't saying. Major Huawei partners, including top U.S. distributor Synnex, have declined to comment on the matter or did not respond to requests by CRN for comment.
In a report that aired Sunday evening on CBS' "60 Minutes," Rep. Mike Rogers, a Michigan Republican and chairman of the U.S. House of Representatives' Permanent Select Committee on Intelligence, told U.S. business owners that if they 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."
The "60 Minutes" story anticipated a report from the Intelligence committee that surfaced Monday that calls out both Huawei and another Chinese telecom and mobile equipment company, ZTE, as security risks because their products could be used for spying on American citizens.
It's another public relations setback for Huawei's attempts to build credibility as a provider of networking, storage, video and other products and services to U.S. customers. While Huawei is an established presence throughout the world, especially in emerging markets -- it's the No. 2 global maker of telecom equipment, behind Ericsson -- it's been stymied in its effort to drive expansion into North America, particularly in sales to enterprise business customers.
The House committee began to probe both Huawei and ZTE in November 2011. According to emerging details about the Monday report, the committee not only recommends that the U.S. block any M&A activity involving the companies and American investments, but also warns the U.S. government not to buy their equipment and urges U.S. companies to seek alternative vendors.
Huawei, under political fire in the U.S. for years, is rumored to have ties to the Chinese military -- its founder and chief executive, Ren Zhengfei, was a civil engineer for China's People's Liberation Army -- but has steadfastly denied that claim and also that use of its equipment would compromise U.S. business or government customers.
In September, the House committee heard testimony from Charles Ding, senior vice president for the United States, who insisted the company was separate from Chinese government interests and that concerns over security were "unsubstantiated." Huawei dismissed the latest House committee report in a statement sent to CRN and numerous other outlets over the weekend.
"Huawei is a globally trusted and respected company doing business in almost 150 markets with over 500 operator customers, including nationwide carriers across every continent save Antarctica. The security and integrity of our products are world-proven. Those are the facts today. Those will still be the facts next week, political agendas aside," said William Plummer, Huawei vice president, external affairs, in an emailed message.
Among other setbacks for Huawei's professional image, Huawei's former North American joint venture with Symantec, Huawei Symantec, folded late in 2011, and back in March, it was banned from bidding on a $38 billion broadband infrastructure project by the Australian government. Major competitors like Cisco have marketed heavily against the company, painting Huawei as unethical and untrustworthy.
But whether this latest round of bad press harms its U.S. channel relationships is a new question. Huawei a year ago launched a channel program with the stated goal of pushing 100 percent of its U.S. enterprise sales through partners.
This year, it's added two-tier distribution relationships with Synnex and, more recently, specialty distributors Condre Storage and CTDI Supply, as well as with supply-chain and business-process outsourcer Essintial Enterprise Solutions.
According to Rob Claus, Huawei's vice president, U.S. channel sales and marketing, Huawei as of Oct. 1 has 49 Huawei-authorized channel partners, 11 in the process of becoming authorized, and "more on the way." Huawei partners are authorized to sell the company's switching, routing, storage and video telepresence wares in the U.S.
Synnex declined to comment following repeated requests by CRN on Saturday, Sunday and Monday. Requests for comment to Communications Test Design, Condre Storage and Essintial, along with several U.S.-based solution providers thought to be Huawei partners, were not returned.
The top executive at a Midwestern solution provider, who said he looked at Huawei earlier this year and declined to add the line after two meetings with its field sales representatives, said Huawei's perception would continue to be a huge hindrance in the U.S., especially for solution providers serving federal, state, and local government, health care, finance and other industries charged with the protection of sensitive information.
"I have several public sector customers. They are absolutely not going to touch Huawei, for example, and they told me that without blinking the first time I asked them about the products," said the executive, who requested anonymity. "That's the perception and no one's going to buy on bad perception. That was before [the House Committee] said that."
Several news outlets have reported that Huawei is considering an initial public offering (IPO) in the U.S. as a way to make its balance sheet and business intentions more transparent.
Huawei has also added several well-known North America executives to its channel and sales teams over the past two years, but also lost some, too; John Roese, well-known as a former Nortel CTO and until recently senior vice president and general manager, Huawei North America R&D, is now CTO at EMC.
PUBLISHED OCT. 8, 2012