Publicly, the company, which makes equipment that manages the flow of data on the Internet, has not been shy about going after Huawei. Huawei is our biggest “long-term threat,” Cisco chief executive John Chambers said in media interviews earlier this year. He added that the firm does not always “play by the rules.”
By offering equipment sometimes at half the price of rival products, Huawei grew quickly after it entered the U.S. market in 2001, planting its U.S. headquarters in Plano, Tex. It has four research plants and employs about 1,700 workers in the United States. Huawei counts Leap Wireless and Clearwire as customers, as well as several small rural companies. It sold $1.3 billion in gear and devices to U.S. firms last year, about 4 percent of its overall sales.
Bill Plummer, spokesman for Huawei Technologies Co., talks about the company's response to a U.S. House committee report that said the phone-equipment maker may enable Chinese spying, and the impact of the government's investigation on the company's business.
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The House intelligence committee outlined its concerns in a report this week that could tilt the network equipment industry in favor of Cisco, Juniper and Hewlett-Packard in the United States, analysts say. The firms are all big suppliers of gear to U.S. wireless carriers that are racing to build out lightening-speed networks that will service smartphones and tablets around the country.
“China is cyberattacking us every day, and we had real concerns about the role of Huawei and its connection to the Chinese government,” Rep. C.A. Dutch Ruppersberger (D-Md.) said in an interview. He said Cisco representatives have not met with him personally.
“That coupled with the fact that Huawei wanted to expand their market share in the U.S. and grow” caught my attention, he said.
For business rivals, the worrisome ascent of Huawei has fortuitously coincided with growing fears of China’s economic clout, some analysts say.
“What happens is you get competitors who are able to gin up lawmakers who are already wound up about China,” said one Hill staffer who was not authorized to speak publicly about the matter. “What they do is pull the string and see where the top spins.”
But some experts say these concerns are exaggerated. These experts note that much of Cisco’s own technology is manufactured in China.
Doug Guthrie, dean of the George Washington University Business School, said the reaction to Huawei harks back to the fear in the 1980s of Japanese companies that were overtaking the U.S. auto industry and buying up iconic pieces of real estate, such as the Rockefeller building in New York.
The decline of U.S. automakers and the rise of foreign competition hit a nerve for Americans.
“It was long thought that we were the number-one economy and China just supplied cheap labor,” Guthrie said. “Now it is clear that China has a lot to offer in terms of innovation and industrial policy and state investment, and now people are scared.”