October 10, 2012, 1:40 PM — Chinese telecom provider Huawei was hardly a household word a few months ago, but it's had lots of negative publicity of late, from an Economist cover story to a 60 Minutes piece.
And now the US House Intelligence Committee has issued a report recommending that Huawei and ZTE, another Chinese telecom company, be viewed "with suspicion."
As the president of a third-party test lab, I've had some experience dealing with Huawei, its competitors, and its customers. And as a U.S. history buff, I'm also aware that this is hardly the first attempt to drum up fear of "The Other" in the name of patriotism and national security.
While some claims about Huawei are valid, others are unsupported. Let's sort through these. (I'm focusing on Huawei here because I know it better than ZTE.)
1. Huawei is succeeding because of Chinese government backing.
This is true. Beijing is a huge customer and subsidizer of Huawei's development efforts.
Then again, Huawei has lots of company. Toyota's popular Prius wouldn't have happened without a hand from the Japanese government. Airbus and its majority shareholder EADS wouldn't exist if Western European governments hadn't encouraged defense contractors to merge.
We have hugely successful public/private endeavors in the U.S., too. Some of our most important scientific and engineering achievements - things like atomic energy, space travel, human genome mapping, and the Internet itself - came out of government research programs.
The problem we have is too little R&D spending, not too much. Scream about waste all you want, but there's a baby/bathwater problem here. There's been a long-term slump in U.S. R&D funding while China is increasing its funding 10% year over year. We're not doing enough R&D spending to keep pace.
2. Buying Huawei is unpatriotic; it means replacing U.S. gear with Chinese stuff.
All telecom providers, including U.S. ones like Cisco, make at least some gear in China.