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U.S. Resellers Wary of Huawei's Risk

October 8, 2012 | Telepresence Options
Larry Walsh, Channelnomics

Huawei Technologies Co.'s ambitions in the America channel now face a substantially steeper hill following last night's report on CBS's 60 Minutes, in which the stalwart television news magazine detailed suspicions of the China-based telecommunications company's alleged theft of intellectual property and potential threat to U.S. national security.

A spot survey by Channelnomics reveals such assessments by U.S. government officials will sway solution providers from engaging with vendors and distributors that have been labeled as potential thieves of intellectual property who undermine U.S. economic interests and pose a threat to national security.

In the 60 Minutes report, U.S. Rep. Mike Rogers (R-Mich.) offered a damning assessment of Huawei, deeming them bad partners for American businesses and calling out U.S. companies that work with the IT equipment manufacturer.

"If I were an American company today, and I'll tell you this as the chairman of the House Permanent Select Committee on Intelligence, and you 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," said Rogers, who is chairman of the Permanent Select Committee on Intelligence.

Worse for Huawei, more than two-thirds of solution providers polled by Channelnomics say that their customers will be less likely to buy hardware or software from vendors suspected of compromising U.S. national security or economic interest. And, nearly eight out of 10 solution providers say they would not work with such vendors.

The news isn't much better for Huawei's primary distribution partner, Synnex Corp., which has been helping the company identify solution providers for recruitment and sales. The Channelnomics poll found nearly 80 percent of solution providers wouldn't buy from or work with a vendor labeled a national security or economic threat. Only 8 percent of solution providers said the threat didn't matter.

Synnex did not respond to requests for comment. A spokesperson told Channelnomics Saturday night its executives were still engaged at the distributor's annual National Conference in Greenville, S.C. A second request for comment Sunday was not answered.

Huawei last week signed two new distributors, Communications Test Design Inc. of West Chester, Pa., a specialist in communications equipment sales; and Condre Storage Inc. of Eden Prairie, Minn., a niche distributor or storage equipment and services.

The accusations against Huawei are not new. The company has been the subject of numerous allegations of intellectual property theft and suspicions of having hidden ties to the Chinese communist government that could compromise its operational integrity. 60 Minutes correspondent Steve Kroft even noted that Communist Party officials have offices inside Huawei's global headquarters in Shenzhen, China just outside Beijing.

The specter of Huawei's  threat to U.S. national and economic security involves an ongoing tale of corporate espionage and the potential for spying. Huawei has been accused of stealing trade secrets from Canada-based Nortel Networks Corp., which went out of business because it could no longer compete. Cisco Systems Inc. sued Huawei in 2004 for copying its switches down to typos in the manuals. And Motorola Solutions Inc. made allegations that Huawei recruited employees to steal technical information.

As recently as last week, Cisco waived confidentiality agreements between the two companies and called upon Huawei to release the full report on its intellectual property theft.

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