Security worries in US will not deter Huawei from its global ambitions

Chinese telco Huawei claims it will develop rapidly as a global IT supplier, despite concerns over its ability to expand in the US

Chinese telecoms company Huawei said it will develop rapidly as a global IT supplier, despite concerns over its ability to expand in the US.

The company has faced difficulties growing in the US market, after a US Congressional report branded the company a threat to security.

But Huawei said it would be able to compete against large IT organisations such as IBM and Cisco by expanding its IT operations in Europe and other emerging markets outside the US.

William Xu, an executive director and member of Huawei's board, said although the US market for IT is important, it is not critical to the Chinese company's success.

"The US market is big and it's important. But for Huawei, if we look at the global market, there are a lot of markets bigger than the US," he said.

Huawei, traditionally a networking and telecoms equipment provider, began expanding into general IT infrastructure in 2011, and now produces storage, big data and datacentre equipment.

But the company has yet to secure significant sales in the US, which, combined with South America, accounts for only 13% of its total $40bn annual sales.

Restoring trust in the Huawei brand 

The company, founded by Ren Zhengfei, a former People's Liberation Army officer, has been viewed with suspicion in the US, despite Huawei's efforts to assuage concerns over the security of its equipment.

A report by the Permanent Select Committee on Intelligence in October 2013 called for a ban on the use of Huawei's equipment in government contracts and urged businesses to consider long-term security risks associated with using Huawei's equipment.

Huawei has dismissed the findings as baseless and reckless, and has taken steps to reassure its customers that the security of its equipment has not been compromised by the Chinese government.

It makes little sense to worry about the security of one supplier's equipment without worrying about the security of another's equipment, said Xu, referring to the controversy.

Growing the IT business

Xu said Huawei would focus on expanding its IT business in other regions of the world, during an interview at the company's cloud conference in Shanghai.

"In the IT sector, if we look at China, Europe and emerging markets, the total volume of these markets is very big," he said.

He pointed out that having low sales in the US had not prevented Huawei from becoming one of the world's largest telecommunications suppliers.

"Huawei's market share in telecoms equipment is very small [in the US], but it is not a hindrance to Huawei becoming a world-leading telecoms supplier," he said.

In the US, Huawei is increasingly working with US suppliers as partners, which may help it grow in the US over time.

Raymond Lau, president for partners and alliances at the telecoms company, said Huawei's enterprise business was beginning to make progress by working with US partners in less sensitive areas, such as IT for the education sector.

This year, for example, Huawei formed a partnership with Newegg, a US online shopping site, which is now selling Huawei's equipment online.

Intel, one of Huawei's US technology partners, is working with the Chinese supplier to help it secure business in the US.

Arthur Fang, director of the Huawei Global account for Intel China, said US businesses were open to Huawei's technology. "We are trying to match-make Huawei with our salesforce in the US, and help them engage," he said.

Securing the internet

Huawei has acknowledged that the growing scale of the internet, particularly through the internet of things (IoT) that will link billions of devices, is making network security a growing concern.

Xu said the problem needs to be addressed through collaboration between governments, industries and regulators.

"The stability and security of networks is a common concern of industry. Recently, there have been a lot of cases of leaked personal information. To solve the problem and secure the internet, we need joint efforts from government, users, carriers and suppliers," he said.

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