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Gruia: Stop the Cheap Shots at Huawei

Last April, I attended Huawei's Ninth Annual Global Analyst Summit in Shenzhen, witnessing the tremendous progress made by the company in various R&D initiatives. Furthermore, I was able to see that Huawei's leadership is global: its management team is a mini New York Cosmos, uniting some of the best execs from around the world, many of them living in Shenzhen as ex-pats.

Strangely, though, Huawei's strong global performance, its efforts in network security, employee-based stock ownership, willingness to invest in R&D, and interest in joint ventures with U.S.-based companies produces the notion that Huawei represents a threat to U.S. national security interests. This is difficult to understand.

If there was genuine evidence that would be one thing. Yet, too often, Huawei's critics point to the company's president and founder Ren Zhengfei, 68, having served in the Chinese military (where he retired from in 1983). To a link between military membership and ipso facto spying, represents a wild extrapolation based on innuendos and rumors.

Huawei has roughly 65,000 employees who own shares in the company. Roughly 98% of total shares belong to Huawei employees, which leads us to the question of whether an IPO is necessary for Huawei to gain a stronger foothold in the U.S.

An IPO would surely help alleviate some security concerns overhanging the company. Financial analysts have called it a great way to increase transparency. Yet we digress from the charges against Huawei that serve as a backdrop to U.S. opposition to the usage of Huawei equipment by telcos, the purchase of 3Leaf, or the JV with Symantec (SYMC - Get Report).

To apply the argumentum ad absurdum principle, let us assume that the speculation is correct, that Huawei has been engaged in espionage. What can Huawei possibly gain from the Chinese military that can outweigh its tremendous performance?

If the company is guilty of espionage, it may be caught, and risk compromising all of its achievements. Would that make any sense to its thousands of employee shareholders. The answer is "no."

The bottom line remains; with or without an IPO, Huawei deserves a level playing field in its relations with U.S. companies and consumers rather than serving as the target of protectionist trade measures, and ultimately, misinformation.

--Written by Ron Gruia.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Ronald Gruia is the Principal Analyst and Program Leader in Emerging Telecoms at Frost & Sullivan, covering topics such as NGN, 4G/LTE migration, VoIP, Telco 2.0, SDN (Software Defined Networking) and VAS (Value Added Services). He has spoken at conferences such as Mobile World Congress, Supercomm, VON, CTIA, Futurecom, and the VMA, among others. Ronald also writes for various publications, has made TV appearances on BNN and CNBC, and is often quoted in the news media. He is an MIT graduate in Electrical Engineering, has over 16 years of experience in the telecom industry, and earned a U.S. patent while working at Nortel Networks.
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