Youtube, Facebook, and Twitter are all blocked in China. They have
algorithms in place to disrupt Google service as well which makes
it very annoying even using Google here. You get many dead links
when the algo’s are working. Despite blocking American companies
in China, the government is now complaining about getting equal
treatment from the Americans.
Are Chinese telco’s a risk? Of course they are, they were started
and staffed by the security services in China. Their former CEO,
was a top official in their domestic spy agency. This has been an
open secret for 20 years now. Does anyone think that the control
freaks up in Beijing will exhibit monkish behavior and not try
and get information from Chinese Telco’s? How many Chinese
government agencies in China are using Cisco stuff as opposed to
Huawei? I’ll bet none.
The U.S. is finally fighting back and will not allow foreign
governments to spy on their serfs, only THEY are allowed to do that.
U.S. report dashes China telecoms’ expansion hopes
By Jim Wolf
WASHINGTON (Reuters) – The U.S. ambitions of two Chinese telecom
equipment makers were stopped in their tracks on Monday as a
congressional report urged American companies to stop doing business
with the firms, raising fears of retaliation from China.
Huawei, the world’s second-largest maker of routers and other
telecom gear, and ZTE, the fifth-largest, for years have been stymied
in their efforts to make big inroads into the United States due to
national security concerns, but Monday’s report escalated the dispute.
The U.S. House of Representatives’ Intelligence Committee warned
industry that Beijing could use equipment made by the two companies
to spy on certain communications and threaten vital systems through
computerized links.The panel urged network providers and others to
seek other vendors for their projects.
“It’s absolutely devastating,” said Roger Entner, a telecoms analyst
at Recon Analytics. “While Huawei had its hands tied already, it’s one
thing having restrictions that aren’t voiced publicly, but it’s another
thing entirely when the government comes out publicly and says not to
use Huawei.”
Hi Dan,
I think this security threat is very exaggerated. I know for a fact that Huawei has provided infrastructure for South Korea in very sensitive areas (i.e military), and know personally policy makers in the government who were satisfied with Huawei (Huawei also provides “source code”).
Rather, I believe this is another U.S grand strategy to block potential Chinese companies to become successful in global market.
Dan,
Furthermore, this situation reminds me of IMF crisis in South Korea in 1997. Prior to the IMF crisis, companies you may know (like Samsung, Hyndai – which were heavily supported and protected by the Korean government) could not participate in the global market freely; however, during the IMF crisis, there was a condition for the bailout among many (posed by the IMF) that the Korean government must allows the foreign ownership of those companies greater than 50%, effectively controlling those companies.
Currently, foreign (mostly Americans) stock ownership for these companies are greater than 50%.
Good point Jerome. I remember 1997 well, it was a total fire sale in S. Korea.
I was part of a deal team that did due diligence on Mando, we recommended to buy the company but our management had no vision. That would have made us 10x their money through the rebound and currency re-strengthing.
South Korea is a bizarre situation where they protect their own home market for Korean companies, yet as you mention a large share of the stock ownership of these companies are foreign. I supposed if you control the plants, people, and equipment , it probably does not matter, you could always dilute the foreign holders with new stock issue.
Hi Jerome-
I agree with you that the security threat is exaggerated and I am sure that Cisco’s lobbyists are working overtime with campaign donations to block these guys. This is probably more about protection…however, with that being said, I am not going to feel sorry for a company built on IP theft such as Huawei and ZTE. The U.S. cannot block these guys from becoming successful, they are already successful all over the world.
China, along with other Asian countries want their cake and eat it to. China has 15-20% duties on imports yet exports duty free. They block their own markets, and get mad when other countries fight back. A good example, is all of the energy deals. They get angry when they are blocked from taking over a large energy company in the U.S. or Canada yet this sector is totally closed off to foreign and even private ownership in China.
Dan-
ZH just did a cover article on how China is consuming twice the beer of Americans. I heard that here FIRST.
Think they are backstepping easily (ignoring more glaring facts that dispute their China bubble call) into realizing that if there is a big boom it will be the quietest in China?
Gonna go read it now but had to get a shout out to ya first – udaman
Cheers Slattery!
I have been amazed how the bring media have bought into the China bubble mantra put out by the mainstream media. I don’t expect it to let up, the U.S. and U.K. still control Reuters and Bloomberg, both powerful weapons in a media perception war.
As for China, house prices up slightly, car sales up, consumer goods doing very well, and GDP is up 7.5%. China is not the one being forced to print money to meet 80% of its debt load like the Fed is doing. Sometime other people will wake up to that fact.